2019 (7) TMI 829 - AT - Service Tax

Construction of Residential complex service - appellant has received payment from the prospective buyers before the grant of completion certificate - period 2007-2011 - HELD THAT - In the present case, the appellants were constructing residential flats on their own land as the building permit was granted to the appellant. Further, the completion and occupancy certificate were also given to the appellant and the initial building tax was also paid by the appellant. This issue is no more res integra and has been settled by this Tribunal in the case of C.C.E C.S.T. -BANGALORE SERVICE TAX- I VERSUS KEERTHI ESTATES PVT. LTD. 2018 (10) TMI 840 - CESTAT BANGALORE wherein identical facts were involved and the Tribunal has held that Prior to 01.07.2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether service tax is payable by builders engaged in the construction of residential complexes before 1.7.2010.
2. Whether the impugned order passed by the Commissioner (A) rejecting the appellant's appeal is sustainable in law.

Analysis:
1. The appeal involved a dispute regarding the payment of service tax by a partnership firm engaged in constructing residential complexes. The appellant argued that no service tax was payable before 1.7.2010, citing a relevant Explanation inserted under Section 65(105)(zzzh) of the Finance Act, 1994. The appellant relied on a Tribunal decision in the case of CST vs. Keerthi Estate Pvt. Ltd. to support their claim. The Tribunal analyzed the facts, noting that the appellants had the necessary permits and certificates for construction. Referring to the Keerthi Estate Pvt. Ltd. case, the Tribunal concluded that builders were not liable to pay service tax for construction of residential complexes before 1.7.2010. Therefore, the impugned order was set aside, allowing the appeal of the appellant.

2. The impugned order was challenged on the grounds that it failed to consider binding judicial precedents and facts of the case. The appellant contended that the order was unsustainable in law. The Tribunal examined the arguments presented by both parties. It noted that the issue had been settled in previous Tribunal decisions, including the Keerthi Estate Pvt. Ltd. case. Relying on the consistent interpretation that no service tax was payable by builders before 1.7.2010, the Tribunal found the impugned order to be legally unsustainable. Consequently, the order was set aside, and the appellant's appeal was allowed with consequential relief. The Tribunal also dismissed the Revenue's appeals seeking to impose penalties under Section 78, as they were deemed not maintainable.

In conclusion, the Tribunal ruled in favor of the appellant, holding that builders were not liable to pay service tax for the construction of residential complexes before 1.7.2010. The impugned order passed by the Commissioner (A) was set aside, and the appellant's appeal was allowed.