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2023 (3) TMI 570 - AT - Service TaxWorks Contract Service - demand for the period before and after 01.06.2007 - HELD THAT - So far as the period prior to 01.06.2007 is concerned it is not in doubt that the demand has been made in the category of works contract service . The works contract service was not taxable prior to 01.06.2007 has held by Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT consequently the demand for the period 01.06.2007 made under the category of the works contract service is set aside. The definition of residential complex excludes from the levy of Service Tax complex which is constructed by a person directly engaging any other person for designing or planning of the lay out and the construction of such complex is intended for personal use as residence by such persons. - Reliance can be placed in the case of M/S. SIMA ENGINEERING CONSTRUCTIONS, S. RAJANGAM, T.M. SARAVANAN, M/S. MARIMUTHU GOUNDER SONS VERSUS CCE, TRICHY 2018 (5) TMI 405 - CESTAT CHENNAI where it was held that the appellant, has engaged sub- contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax. The use of the residential complex by (GSPHCL) is excluded from the definition of residential Complex as intended for personal use as residence by such persons . Appeal allowed.
Issues Involved:
1. Demand of service tax under the category of "Works Contract Service" for the period prior to 01.06.2007. 2. Applicability of service tax on "Works Contract Service" for the period after 01.06.2007. 3. Definition and exclusion of "residential complex" from service tax under "Works Contract Service". Detailed Analysis: 1. Demand of Service Tax Under the Category of "Works Contract Service" for the Period Prior to 01.06.2007: The appellant argued that the service provided by them was in the nature of "Works Contract Service" and relied on the Supreme Court decision in the case of Larsen & Toubro Ltd (2015) to assert that no service tax could be demanded for the period prior to 01.06.2007. The Tribunal confirmed this position, stating that "the works contract service was not taxable prior to 01.06.2007," thereby setting aside the demand for this period. 2. Applicability of Service Tax on "Works Contract Service" for the Period After 01.06.2007: For the period after 01.06.2007, the definition of "Works Contract Service" under section 65(105)(zzzza) of the Finance Act, 1994 was considered. The Tribunal examined whether the services provided by the appellant fell under this definition, which includes various construction activities such as erection, commissioning, installation, and construction of residential complexes. 3. Definition and Exclusion of "Residential Complex" from Service Tax Under "Works Contract Service": The Tribunal referred to the definition of "residential complex" which excludes complexes constructed for personal use. The appellant argued that the construction was for Gujarat State Police Housing Corporation Ltd. (GSPHCL) for use by police personnel, thus qualifying for the exclusion. The Tribunal cited several precedents, including Sima Engineering (2018), Lanco Tanjore Power Co. Ltd., and Khurana Engineering, to support this interpretation. In Sima Engineering, it was held that residential complexes built for use by employees of an organization (such as police personnel) are intended for personal use and thus excluded from service tax. Similarly, in Lanco Tanjore Power Co. Ltd., the Tribunal found that residential units constructed for the personal use of employees were not subject to service tax. The Khurana Engineering case further clarified that residential complexes constructed for government employees were excluded from the definition of taxable services. The Tribunal concluded that the residential complex constructed by the appellant for GSPHCL was intended for personal use as residence by police personnel, thus falling within the exclusion clause of the "residential complex" definition. Consequently, the Tribunal found no merit in the demand for service tax and set aside the impugned order, allowing the appeal. Conclusion: The Tribunal ruled that the demand for service tax under "Works Contract Service" for the period prior to 01.06.2007 was not maintainable. For the period after 01.06.2007, the construction of residential complexes for GSPHCL was excluded from service tax as it was intended for personal use by police personnel. The appeal was allowed, and the impugned order was set aside.
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