2018 (1) TMI 558 - AT - Service Tax

Construction of Complex Service - residential complex for use by the staff of M/s Aditya Cement - scope of personal use - Held that - the assessee-Appellants are directly engaged by the client for building the staff quarters which are for personal use - The Tribunal in the case of Khurana Engineering Ltd. Vs CCE, Ahmedabad 2010 (11) TMI 81 - CESTAT, AHMEDABAD held that the staff quarters meant for use by the Income Tax Department for their employees is clearly covered by the explanation personal use - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Appeal against Order-in-Original demanding Service Tax for construction activities.
- Interpretation of "Construction of Complex Service" under Section 65(zzzh) of Finance Act, 1994.
- Whether construction done by assessee for personal use exempts from tax liability.
- Comparison with similar case law regarding construction for staff quarters.

Analysis:
The appeal was filed against an Order-in-Original demanding Service Tax for construction activities undertaken by the assessee. The dispute revolved around the interpretation of "Construction of Complex Service" as per Section 65(zzzh) of the Finance Act, 1994. The assessee argued that the residential complex constructed for the staff of a client should be excluded from tax liability under the definition provided in the Act. The Department, however, contended that since the designing and planning were done by the assessee and not the client, tax liability should be upheld.

Upon review, the Tribunal noted that the original authority erred in its interpretation of the tax entry. It was observed that if a person engages another for designing and planning, and the client does not carry out the construction themselves, the tax entry does not apply. The Tribunal referenced a similar case involving construction for staff quarters for the Income Tax Department, where it was held that such constructions for personal use are exempt from tax liability. In the present case, the Tribunal found that the assessee was directly engaged by the client for building staff quarters for personal use, thus setting aside the tax liability confirmed by the original authority.

Therefore, the Tribunal allowed the appeal, stating that the construction undertaken by the assessee for personal use of the client falls outside the scope of tax liability under the "Construction of Complex Service." The decision was influenced by the precedent set in a comparable case law, leading to the dismissal of the tax liability and the allowance of the appeal.