2019 (2) TMI 872 - AT - Service Tax

Taxability - Construction of Residential Complex Service - period from October 2009 to September 2010 - Held that - Larger Bench in the case of M/s. Bhayana Builders Pvt. Ltd. Vs. Commissioner 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) to hold that free supplies are not to be included in the gross amount charged. It was also held in the said case that for this reason, the 67% abatement cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax under 'Construction of Residential Complex Service'
2. Interpretation of contracts as 'Works Contract Service'
3. Applicability of case laws in determining tax liability

Analysis:
1. The case involved proceedings against the appellant for demanding service tax under 'Construction of Residential Complex Service' as per Section 65(91a) of the Finance Act, 1994. The Original Authority confirmed the demand and imposed penalties, which were upheld by the Commissioner (Appeals). The appellant argued that even after 01.06.2007, the Show Cause Notice should be issued under Works Contract Service based on relevant case laws.

2. The appellant contended that their contracts were in the nature of 'Works Contract' involving sale of material and service. However, the lower appellate authority held that the service fell under 'Construction of Residential Complex Service' as per Section 65(105)(zzzh). The Tribunal found this conclusion contradictory to its previous rulings and reiterated that the appellant's activities should be treated as 'Works Contract Service.'

3. The Revenue relied on various case laws to support their argument, including M/s. G.D. Builders, M/s. BCC Developers and Promoters Pvt. Ltd., and M/s. National Building Construction Corporation Ltd. However, the Tribunal noted that these cases did not consider the decision of the Hon'ble Apex Court in the case of M/s. Larsen and Toubro Ltd., which clarified that composite contracts cannot be vivisected. Therefore, the Tribunal held that the impugned Order could not be sustained and set it aside, allowing the appeal with consequential benefits as per law.