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2018 (11) TMI 1086 - AT - Service TaxConstruction of a residential complex Service - non-discharge of service tax - Penalty - Held that - Identical issue decided in the case of M/s. Aswini Apartments Vs. Commissioner of G.S.T. & Central Excise, Chennai South 2018 (10) TMI 404 - CESTAT CHENNAI , where it was held that the demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007. The levy of service tax prior to 1.6.2007 cannot also sustain by application of the decision of the Hon ble Supreme Court in the case of Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT - demand set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of service tax on construction of residential complex services. 2. Classification of composite contracts involving both supply of materials and services. 3. Validity of service tax demand for periods prior to and after 1.6.2007. 4. Application of judicial precedents and prior rulings. Detailed Analysis: 1. Applicability of Service Tax on Construction of Residential Complex Services: The appellant was engaged in constructing residential complexes without obtaining service tax registration or paying the required service tax. The Revenue issued a Show Cause Notice demanding service tax, interest, and penalties for the period from April 2007 to September 2009. The Commissioner of Service Tax confirmed the demand and imposed penalties. The appellant contested this decision, arguing that the issue had been previously resolved in favor of similar appellants by the CESTAT. 2. Classification of Composite Contracts Involving Both Supply of Materials and Services: The Tribunal examined whether the contracts entered into by the appellant were composite contracts, which involve both the supply of materials and the rendering of services. The Tribunal referenced the case of Real Value Promoters Ltd., which clarified that service tax on composite contracts should be classified under "Works Contract Service" as defined under Section 65(105)(zzzza) of the Finance Act, 1994, effective from 1.6.2007. It was concluded that prior to this date, service tax could only be levied on contracts that were purely for services. 3. Validity of Service Tax Demand for Periods Prior to and After 1.6.2007: The Tribunal noted that prior to 1.6.2007, composite contracts could not be subjected to service tax under categories like "Construction of Residential Complex Service." This position was upheld by the Supreme Court in the Larsen & Toubro case, which stated that composite works contracts involving both service and supply of goods were not taxable before 1.6.2007. Post 1.6.2007, only those contracts that were purely service-oriented could be taxed under the relevant service categories. The Tribunal concluded that the demand for service tax on composite contracts under "Commercial or Industrial Construction Service" or "Construction of Complex Service" was not sustainable for periods both before and after 1.6.2007. 4. Application of Judicial Precedents and Prior Rulings: The Tribunal heavily relied on its previous ruling in the case of M/s. Aswini Apartments Vs. Commissioner of G.S.T. & Central Excise, Chennai South, which had set a precedent for similar cases. The Tribunal reiterated that the service tax demands for composite contracts could not be sustained under the aforementioned service categories. The Tribunal also cited several other decisions, including those of the Supreme Court and various High Courts, to support its conclusion that composite contracts should be classified and taxed under "Works Contract Service" post 1.6.2007, and that no service tax could be levied on such contracts prior to this date. Conclusion: The Tribunal set aside the impugned order of the Commissioner of Service Tax, holding that the demand for service tax under "Construction of Residential Complex Service" was unsustainable for the periods before and after 1.6.2007. The appeal was allowed with consequential reliefs, if any, in line with the judicial precedents and legal provisions discussed.
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