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2014 (1) TMI 407 - AT - Service TaxWaiver of pre-deposit of Service Tax - Construction of Complex Services - Held that - Appellants are developing and constructing residential complex having more than twelve residential units. The said construction of residential complex was being undertaken by the appellants on their own land with their own resources for selling the same to prospective buyers - when construction of residential complex is for sale of flats and the same are ultimately sold to the customer under the agreement, it cannot be held that there was any service being provided by the builders to their customer even if a part amount of the cost of the flats is being received in advance. It stands held that such advance amount given by the prospective buyer is against sale consideration of flat and building and not for obtaining any service, so as to make an activity as leviable to Service Tax - Prima facie case in appellants favour - Stay granted.
Issues:
Prayer to dispense with pre-deposit of Service Tax of Rs. 18,19,099.00 for providing "Construction of Complex Services". Analysis: The appellants were engaged in developing and constructing a residential complex with more than twelve units, using their own resources to sell to prospective buyers. However, lower authorities alleged that the construction progressed with advances from buyers, indicating the appellants did not use their own resources entirely. The issue was whether providing construction services to buyers was justified. At an interim stage, the Tribunal referred to a judgment by the Hon'ble High Court of Gauhati in the case of Magus Construction Pvt. Ltd. v. Union of India, which held that selling residential complexes without providing a separate service does not attract Service Tax, even if advances are received. This view was supported by stay orders in cases like Korath Gulf Links Builders Pvt. Ltd. v. Commr. of Central Excise, Cochin and Ocean Builders v. Commissioner of Central Excise, Mangalore. Additionally, the Tribunal cited Board's Circular No. 108/2/2009-S.T., dated 29-1-2009, to assert that builders selling flats do not incur Service Tax liability. Based on the above legal precedents and circular, the Tribunal found that the appellants had a strong prima facie case in their favor. Consequently, the Tribunal decided to dispense with the pre-deposit condition of Service Tax and allowed the application in favor of the appellants. The decision was pronounced in open court on 23-8-2011.
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