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2018 (10) TMI 1211 - AT - Service TaxConstruction Services - composite contracts - Commercial or Industrial Construction Service - construction of Residential Complex Service - It was noticed that appellant did not pay service tax on their share of construction of residential complex service for the period from January 2009 to June 2009. Held that - The issue stands squarely covered by the decision of this Bench in appellant s own case REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI , where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service - For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. The impugned order cannot then sustain and requires to be set aside - appeal allowed - decided in favor of appellant.
Issues:
Taxability of construction activities under Commercial or Industrial Construction Service (CICS) and Residential Complex Service (RCS) for non-payment of service tax on specific areas and Corpus Fund collection. Issue 1: Taxability of Construction Activities under CICS and RCS The appellant, engaged in construction services, entered into an agreement with a landowner for constructing a residential and commercial complex. The department alleged tax liability under CICS and RCS for specific areas constructed and handed over to the landowner. The appellants did not pay service tax on the constructed areas despite receiving land share as consideration. A show cause notice was issued proposing a significant demand along with penalties. The original authority confirmed the demand and imposed penalties, which the appellants contested. Analysis: The issue of taxability of composite contracts involving service provision and goods transfer under CICS and RCS was settled by the Supreme Court and previous tribunal decisions. The tribunal noted that the construction activities were composite works contracts involving both material supply and services. The Supreme Court's decision in Larsen & Toubro case clarified that service tax on composite contracts was not applicable before 1.6.2007. The tribunal concluded that such composite contracts were covered under Works Contract Service, not CICS or RCS. The tribunal relied on legal precedents and legislative intent to support its decision, setting aside the demand and penalties imposed. Issue 2: Corpus Fund Collection and Service Tax Liability Apart from the construction taxability issue, the appellants were also accused of not paying service tax on the Corpus Fund collected at a fixed rate per sq.ft. for the flat owners' association. The show cause notice demanded service tax on this collection along with penalties. The original authority confirmed the demand, imposing penalties which the appellants challenged. Analysis: The tribunal did not specifically address the Corpus Fund issue in the detailed analysis provided. However, it can be inferred that the tribunal's decision to set aside the demand and penalties related to construction taxability would likely apply to the Corpus Fund collection as well. Since the tribunal found the construction activities not liable under CICS or RCS, it is probable that the Corpus Fund collection, being part of the same construction activities, would also not attract service tax liability. In conclusion, the tribunal's detailed analysis and reliance on legal precedents led to the setting aside of the demand and penalties imposed on the appellants for non-payment of service tax on specific construction areas and Corpus Fund collection. The decision clarified the taxability of composite works contracts under Works Contract Service and emphasized the importance of specific legal definitions and legislative intent in determining service tax liabilities.
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