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2024 (7) TMI 755 - AT - Service TaxLevy of service tax - Construction of Complex and residential complex service - Construction Services provided by the respondents to M/s Gujarat State Police Housing Corporation Ltd. (GSPHCL), M/s Surat Municipal Corporation (SMC) and M/s Surat Urban Development Authority (SUDA) - HELD THAT - 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 placed in the case of Khurana Engineering 2010 (11) TMI 81 - CESTAT, AHMEDABAD wherein it was held that ' service provided by the appellant is to be treated as service provided to Govt. of India directly and end use of the residential complex by Govt. of India is covered by the definition Personal Use in the explanation to definition of residential complex service, the other aspects need not be considered.' In the present matter works orders clearly shown that respondents has provided the construction services to GSPHCL, SMC SUDA and status of these organisations are Government Bodies. Thus, the view taken by the Ld. Commissioner is agreed, that construction works undertaken on behalf of the Government for non-commercial purpose are outside the purview of the Service tax. The service provided by the respondents are to be treated as service provided to Govt. and end use of the residential complex by Govt. is covered by the definition Personal Use in the explanation to definition of residential complex service and not leviable to Service tax. There are no merit in the present appeals of the department - appeal dismissed.
Issues Involved:
1. Whether the construction services provided by the respondents to Gujarat State Police Housing Corporation Ltd. (GSPHCL), Surat Municipal Corporation (SMC), and Surat Urban Development Authority (SUDA) are liable to service tax. Issue-wise Detailed Analysis: Issue 1: Liability of Service Tax on Construction Services for GSPHCL, SMC, and SUDA Background: The respondents, M/s Tirupati Construction and M/s A.M. Bhanderi, carried out construction work for government bodies including GSPHCL, SMC, and SUDA during 2007-08 to 2011-12 without registering for service tax. The Revenue department initiated an inquiry, leading to show cause notices for service tax demands, which were dropped by the Commissioner. Revenue's Argument: The Deputy Commissioner (AR) argued that: - The construction services provided to GSPHCL, SMC, and SUDA are taxable under 'Construction of Complex' and 'Works Contract Services' as per Section 65(30a) and 65(91a) of the Finance Act, 1994. - The complexes built were not for self-use but were meant to be sold or allotted for residential purposes, thus falling outside the exemption for personal use. - The Commissioner erroneously concluded that the constructions were for non-commercial purposes, despite the fact that residential units were allotted against payment, albeit at subsidized rates. Respondents' Argument: The respondents supported the Commissioner’s findings, arguing that: - The constructions were for government bodies and intended for personal use, thus exempt from service tax. - They cited several judgments supporting the exemption for constructions intended for personal use by government bodies. Tribunal’s Findings: The Tribunal examined the work orders and definitions of 'Works Contract Service' and 'Residential Complex Service': - Works Contract Service: Includes construction of new buildings or residential complexes, among other activities. - Residential Complex: Excludes complexes constructed for personal use, including use by another person on rent or without consideration. Key Judgments Referenced: - Sima Engineering (2018): Construction for personal use by government bodies is exempt from service tax. - Khurana Engineering (2011): Services provided to government bodies for residential use by employees are exempt. - Various CESTAT Decisions (2023): Reaffirmed that constructions for government bodies for non-commercial purposes are outside the purview of service tax. Conclusion: The Tribunal upheld the Commissioner’s decision, concluding: - The constructions were for government bodies and intended for personal use, thus exempt from service tax. - The definition of residential complex service excludes constructions intended for personal use by government bodies. - The appeals by the Revenue department were dismissed, and the original orders dropping the service tax demands were upheld. Final Order: The Tribunal dismissed the appeals and upheld the Orders-in-Original, confirming that the construction services provided by the respondents to GSPHCL, SMC, and SUDA are not liable to service tax. The cross objections were also disposed of. Pronouncement: The judgment was pronounced in the open court on 12.07.2024.
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