2016 (11) TMI 1354 - AT - Service Tax

Whether the activity of construction of residential complex by the respondent, in terms of agreement entered into with M/s. Jindal Power Ltd, for the occupation of flats by their employees, would attract Service Tax liability under the category of construction of residential complex or not? - Held that - Reference can be made to the decision of Tribunal in the case of Commissioner of Central Excise, Aurangabad vs. Mall Enterprises 2015 (11) TMI 333 - CESTAT MUMBAI as also to the decision in the case of Nithesh Estates Ltd. vs. CCE & ST & Cus., Bangalore 2015 (11) TMI 219 - CESTAT BANGALORE , where it was held that From the definition it is quite clear that if the complex is constructed by a person directly engaging any other person for design or planning or layout and such complex is intended for personal use as per the definition, service tax is not attracted. Personal use has been defined as permitting the complex for use as residence by another person on rent or without consideration. Appeal rejected - decided against Revenue.

Summary

Issues:
Whether the construction of a residential complex by the respondent, as per an agreement with a company for employee occupation, attracts Service Tax liability under 'construction of residential complex' category.

Analysis:
The judgment revolves around the issue of Service Tax liability concerning the construction of a residential complex by the respondent for the occupation of flats by employees of a company. The Tribunal considered the appeal filed by the Revenue against the Commissioner's order. The central question was whether this activity falls under the category of 'construction of residential complex' for Service Tax purposes. The Commissioner, in granting relief to the respondent, referred to Circular No. 332/35/2006 TRU and a Tribunal precedent decision. The Commissioner's order highlighted that the use of residential units by the company for its business purposes did not impact the Service Tax liability as long as the prescribed stipulations for 'residential use' were not violated.

The Tribunal noted that the issue at hand was not a novel one and had been addressed in previous decisions. Besides the Commissioner's reliance on the Tribunal decision, the Tribunal pointed out that other decisions, such as the case of VMT Spinning Company Ltd. vs. CCE Chandigarh, supported the position taken by the Commissioner. The Tribunal specifically mentioned the decisions in the cases of Commissioner of Central Excise, Aurangabad vs. Mall Enterprises and Nithesh Estates Ltd. vs. CCE & ST & Cus., Bangalore as further supporting the conclusion reached by the Commissioner.

Ultimately, the Tribunal found that the issue had already been settled through various precedents and there was no need to disturb the Commissioner's order. Consequently, the Tribunal rejected the Revenue's appeal, affirming the decision in favor of the respondent. The judgment provides a comprehensive analysis of the legal position regarding the Service Tax liability concerning the construction of a residential complex in the context of agreements with companies for employee accommodation.