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2019 (5) TMI 152 - AT - Service TaxConstruction Services - composite contracts - period involved is from Jun. 05 to Mar. 10 - HELD THAT - The contracts are composite in nature involving both supply of materials as well as rendering of services. The agreement is a Tripartite agreement where the developer had to put in 50% and the land owner had to put in 50% which was the total value for the constructions. The demand has been quantified by authority below after giving abatement from the total value. Thus it is very much clear that the contracts are composite in nature. The decision in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT would apply to the period prior to 01.06.2007 wherein it has been held that the demand of service tax cannot sustain for composite contracts. So also, the decision of Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI would apply to the period after 01.06.2007. The demand cannot sustain - appeal allowed - decided in favor of appellant.
Issues:
1. Whether the demand for service tax under Construction of Residential Complex Services is sustainable for composite contracts involving both supply of materials and labor. 2. Applicability of judicial precedents to determine the tax liability on composite contracts. 3. Validity of the demand for service tax for the period prior to and after 01.06.2007. Analysis: 1. The appellants, engaged in providing Construction Services, were alleged to have not discharged service tax under Construction of Residential Complex Services for various projects. The Commissioner confirmed the demand, interest, and penalties, leading to the appeal. The appellant argued that the demand was raised incorrectly as the works were composite contracts involving both labor and material supply. Citing legal precedents, the appellant contended that demand for service tax on such composite contracts cannot be sustained. The Hon'ble Apex Court's decision prior to 01.06.2007 and a Tribunal decision post that date were relied upon to support this argument. 2. The Revenue's Authorized Representative supported the findings in the impugned order, while referring to a decision in the case of M/s. GDS Builders. However, the Tribunal found that the contracts in question were composite in nature, involving both material supply and services. The Tribunal held that the demand for service tax could not be sustained based on the nature of the contracts and the legal precedents cited by the appellant. The Revenue's reliance on the M/s. GDS Builders case was deemed unhelpful as it had been considered by the Apex Court in a previous judgment. 3. The period under consideration was from Jun.'05 to Mar.'10, during which the contracts were found to be composite in nature. The Tribunal noted that the demand was quantified after abatement from the total value, indicating the composite nature of the contracts. Referring to legal decisions, the Tribunal concluded that the demand for service tax could not be upheld for both the period before and after 01.06.2007. Consequently, the impugned order was set aside, and the appeal was allowed. The department's appeal against the dropped part of the demand was dismissed for lacking merit.
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