2019 (4) TMI 1204 - AT - Service Tax

Construction of Residential Complex - construction of houses for the Rajasthan Housing Board and M/s. Ansal Properties - HELD THAT -The issue decided in the case of COMMISSIONER VERSUS MACRO MARVEL PROJECTS LTD. 2009 (7) TMI 1222 - SUPREME COURT , where it was held that construction of individual residential units are not subject to levy of service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax for construction of houses under the category of "Construction of Residential Complex"?
2. Interpretation of the term "residential complex" and "residential unit" as per the Finance Act, 1994.
3. Applicability of previous Tribunal decisions in determining liability for service tax on construction of individual houses.

Issue 1: Liability for Service Tax on Construction of Houses
The appellant was engaged in constructing houses for the Rajasthan Housing Board and M/s. Ansal Properties. Proceedings were initiated to confirm the demand for service tax under the category of "Construction of Residential Complex." The appellant argued that the houses constructed were individual houses not falling under the definition of a residential complex. They relied on a Tribunal decision stating that individual residential units should not be considered part of a residential complex.

Issue 2: Interpretation of "Residential Complex"
The Commissioner (Appeals) interpreted the term "residential complex" to include buildings or houses numbering more than twelve, with a "residential unit" not limited to a single apartment but also encompassing a "single house." The Commissioner disagreed with the Tribunal's interpretation, stating it would render certain provisions redundant. The Tribunal found fault with this interpretation, emphasizing that orders passed by higher authorities are binding on lower authorities.

Issue 3: Applicability of Previous Tribunal Decisions
The appellant cited Tribunal decisions where it was held that individual residential units constructed with common facilities and in a common area fall outside the scope of "Construction of Residential Complex." These decisions, including one confirmed by the Honorable Supreme Court, supported the appellant's argument. The Tribunal, considering the issue settled up to the Supreme Court, found no merit in the Revenue's stand and allowed the appeals, setting aside the impugned orders.

Conclusion
The Tribunal, after considering the arguments and previous decisions, concluded that the appellant was not liable to pay service tax for constructing individual houses, as they did not fall under the definition of a residential complex. The impugned orders were set aside, and the appeals were allowed with consequential relief. Additionally, a Misc. Application regarding work orders was disposed of as the appeal was allowed based on legal grounds.