2023 (9) TMI 1281 - AT - Service Tax

Exemption from Service Tax - Construction of Complex service for the service related to construction of houses under Jawaharlal Nehru National Urban Renewal Mission (JnNURM for short) and for Safai Kamdar to Ahmedabad Municipal Corporation - HELD THAT - In the present appeal the fact is not under dispute that the construction of Complex is made for JnNURM scheme and construction of houses for Safai Kamdar for the Ahmedabad Municipal Corporation. In these facts, the houses are made under a particular scheme for the poor people for residential purpose and not for other commercial activity. The construction activity under the same JnNURM scheme, this Tribunal on same issue in the case of MS KHURANA ENGINEERING LIMITED VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD 2022 (12) TMI 1053 - CESTAT AHMEDABAD where it was held that In the present case, the quarters/residential complexes were got constructed by the AMC and AUDA for urban poor people for their residential use, the same amounts to personal use‟. The confirmation of demand qua these services by the Commissioner is therefore not sustainable. Thus, the construction of Complex under the same scheme has been considered by this Tribunal and viewed that such construction of Complex is not liable to service tax. Therefore, following the above decision of this Tribunal, in the present case also the impugned order is not sustainable hence the same is set-aside. Appeal allowed.

Summary

Issues Involved:
1. Liability to pay service tax under the category of Construction of Complex service for construction of houses under JnNURM and for Safai Kamdar for Ahmedabad Municipal Corporation.

Summary:

Issue 1: Liability to Pay Service Tax for Construction under JnNURM and Safai Kamdar Schemes

The appellant contested the liability to pay service tax under the category of Construction of Complex service for constructing houses under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) and for Safai Kamdar for the Ahmedabad Municipal Corporation. The appellant relied on various judgments which held that such construction activities are not liable for service tax.

The Tribunal examined the relevant legal provisions, specifically Section 65(91a) of the Finance Act, 1994, which defines "residential complex." The Tribunal noted that the construction of residential complexes intended for personal use, including use by another person on rent or without consideration, is excluded from the definition and thus from taxability.

In the case of Khurana Engineering Limited, the Tribunal had previously ruled that construction activities under JnNURM for urban poor people amounted to "personal use" and were not subject to service tax. Similar judgments in the cases of DH Patel and Natvar Construction Co. reinforced this position, confirming that construction for government schemes like JnNURM and Rajiv Awaas Yojana are not taxable.

The Tribunal concluded that the construction activities in question, being for residential use under government schemes aimed at the poor, fall under the exclusion for personal use. Therefore, the impugned order demanding service tax was set aside, and the appeal was allowed with consequential relief.