2013 (10) TMI 189 - AT - Service Tax

Taxability of Service u/s 65 (105) (zzh) r.w section 65 (91a) - The applicant was engaged in the business of constructing residential villas Revenue was of the view that such activity was taxable under section 65 (105) (zzh) read with section 65 (91a) of Finance Act, 1994 Held that - The definition of residential complex will cover residences where 12 units in the complex were in one building or in many buildings, if there were common facilities - in the project there were common amenities viz. roads, pathways, open area, garden, septic tanks, sewers, drains pump sets, water lines, general lighting, electricity generator etc. as approved by local competent authority - Therefore, it cannot be said that these buildings were independent housing units - this was a highly contentious issue which can be examined only at the final hearing of appeal with reference to relevant facts - stay granted partly.

Summary

Issues:
1. Whether the construction of residential villas is taxable under section 65 (105) (zzh) read with section 65 (91a) of the Finance Act, 1994.
2. Whether each building having less than 12 residential units can be considered a residential complex as defined under section 65 (91a).
3. Whether the appellant's deposit during the investigation stage is sufficient for the admission of appeal.

Analysis:
1. The appellant, engaged in constructing residential villas, did not pay service tax for constructing 74 dwelling units in Coimbatore. The Revenue contended that the activity was taxable under specific sections of the Finance Act, 1994, and issued a show cause notice leading to a confirmed demand of tax, interest, and penalties against the appellant. The appellant filed an appeal challenging this order and sought a waiver of pre-deposit for admission of the appeal.

2. The appellant argued that service tax is leviable on a residential complex only if each building has more than 12 residential units. Citing a Supreme Court decision and a Tribunal's decision, the appellant contended that buildings with only one residential unit each, even if situated in the same area, should not be considered a residential complex under the relevant section. The appellant also highlighted a previous deposit made during the investigation stage, asserting it as sufficient for appeal admission.

3. The Revenue opposed the appellant's arguments, emphasizing that the definition of a residential complex covers residences with 12 units in one or multiple buildings, provided there are common facilities. Referring to specific amenities in the project approved by the local authority, the Revenue argued against considering the buildings as independent housing units. The Revenue pointed to past pre-deposit orders in similar cases to support their stance.

4. The Tribunal acknowledged the contentious nature of the issue, stating that a detailed examination would be necessary during the final appeal hearing with reference to relevant facts. Considering previous pre-deposit orders, the Tribunal directed the appellant to make a further deposit within a specified timeline. Upon compliance, the pre-deposit of the balance dues from the impugned order was waived, and the collection stayed during the appeal's pendency.