2023 (5) TMI 87 - AT - Service Tax

Levy of Service Tax - construction service - scope of exclusion definition of residential complex under Section 65(91a) of the Finance Act, 1994 - whether the Revenue is justified in demanding Service Tax from the appellant for the construction service provided by them for the period from April 2009 to June 2010? HELD THAT - At paragraph 19 of the impugned order, the Learned Commissioner has observed, after scrutinizing the agreements, that (i) the appellants are the builders of the concerned flats; (ii) the appellants are only constructing the flats to the respective allottees, etc., which, per se, makes it clear that the activity undertaken by the appellant in the capacity of a developer was in the nature of works contract service . The issue has been laid to rest by various co-ordinate Benches of the CESTAT wherein the decision of the 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 has been followed - the co-ordinate Hyderabad Bench, in the case of COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, VISAKHAPATNAM - I VERSUS M/S PRAGATI EDIFICE PVT LTD (VICE-VERSA) 2019 (9) TMI 792 - CESTAT HYDERABAD has held that After 1-7-2010, Service Tax is chargeable under the head of construction of complex services if it is service simpliciter and under works contract service if it is a composite works contract. In view of the order of the Hyderabad Bench, it is clear that no Service Tax could be levied on construction of residential complex on the appellant. The period of dispute here is from April 2009 to June 2010 and hence, no Service Tax was exigible on the appellant. Appeal allowed - decided in favour of appellant.

Summary

Issues:
The main issue in the judgment is whether the Revenue is justified in demanding Service Tax from the appellant for the construction service provided by them for the period from April 2009 to June 2010.

Summary:
The appellant, a developer engaged in residential projects, was paying Service Tax on residential complexes until December 2008 but stopped from January 2009. A Show Cause Notice was issued in October 2010 for demanding Service Tax from April 2009 to June 2010. The Adjudicating Authority confirmed the demands, leading to the appeal.

The appellant argued that the contracts with customers involved a composite of service and transfer of property in goods. They highlighted that there was no Service Tax liability for developers of residential projects before July 2010. The appellant cited precedents from co-ordinate Benches of the CESTAT to support their case.

The respondent supported the findings of the lower authority, leading to a hearing where both sides presented their arguments. The impugned Order-in-Original was examined, and it was noted that the activity undertaken by the appellant as a developer was in the nature of 'works contract service'.

Referring to precedents, the Tribunal concluded that no Service Tax could be levied on the construction of residential complexes by the appellant during the period in dispute (April 2009 to June 2010). Following the established principles, the Tribunal set aside the impugned order and allowed the appeal with any consequential benefits as per law.

The judgment was pronounced in open court on 26.04.2023.