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2024 (9) TMI 923 - AT - Service TaxFailure to discharge appropriate service tax on the construction services provided - Construction of Residential Complex Service - Construction of Commercial or Industrial Construction - extended period of limitation - HELD THAT -The demand is for the period from October 2006 to March 2011 under Construction of Residential Complex Service and Construction of Commercial or Industrial Complex Service. The Annexure to the Show Cause Notice would show that the appellant has provided both Construction of Residential project as well as Commercial project. The issue as to whether a builder / promoter / developer is liable to pay service tax for construction of residential complexes for the period prior to 01.07.2010 is settled by the decision in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES 014 (3) TMI 694 - CESTAT AHMEDABAD . This Tribunal has followed the decision in the case of Vijay Shanthi Builders Ltd. Vs. Commissioner of Service Tax 2017 (8) TMI 519 - CESTAT CHENNAI and set aside the demand. In the present case, it is very much clear that the appellant has carried out the construction services as a builder since the undivided share was also sold and thereafter constructions carried out. They have also carried out constructions for the landowner in exchange of the land value. All these would show that the appellant has acted as a builder / promoter / developer for residential projects. The decision rendered by the Tribunal in the above cases would squarely apply and the demand for the period prior to 01.07.2010 under Construction of Residential Complex Services cannot sustain. The same is set aside. Reliance placed in the case of Real Value Promoters Pvt. Ltd. 2018 (9) TMI 1149 - CESTAT CHENNAI . The said decision was followed by the Tribunal in the case of Jain Housing Construction Ltd. Vs. Commissioner of Service Tax 2023 (2) TMI 1044 - CESTAT CHENNAI . In the said case, it was held that demand of service tax under Construction of Residential Complex Services or Commercial or Industrial Construction Services cannot sustain when the works executed are composite in nature. In the present case, it is very much clear that the construction works carried out by the appellant are indivisible contracts which involve both supply of materials as well as rendition of service. In the Show Cause Notice, the Department has allowed abatement under Notification No. 1/2006 which would establish that all the works executed are composite in nature. Following the decision, in the case of Jain Housing Construction Ltd., it is opined that the demand for the entire period cannot sustain being composite contracts. The impugned order is set aside - Appeal allowed.
Issues:
1. Whether the appellant is liable to pay service tax for construction of residential and commercial complexes. 2. Whether the demand for service tax under Construction of Residential Complex Service and Commercial or Industrial Construction Services can be sustained. 3. Whether the construction services provided by the appellant are composite in nature involving both supply of materials and services. Analysis: Issue 1: The appellant, a partnership firm engaged in construction activities, received a Show Cause Notice for not discharging appropriate service tax on construction services provided. The Original Authority confirmed the demand, interest, and penalties, leading the appellant to appeal before the Tribunal. Issue 2: The appellant contended that the construction services provided were in the nature of self-service until the execution of sale deeds, as clarified by CBEC Circular No. 108/02/2009-ST. The appellant argued that an Explanation inserted with effect from 01.07.2010 to the definition of Construction of residential/commercial complex should apply prospectively. The Tribunal found that the demand under Construction of Residential Complex Service for composite contracts cannot sustain, as per the decision in Real Value Promoters Pvt. Ltd. The Tribunal also noted that the construction works were indivisible contracts involving both supply of materials and services. Issue 3: The Department argued that the construction of residential projects fell under the taxable service of Construction of Residential Complex, citing common areas available for use by more than one person. The Department countered the appellant's reliance on Board Circular No. 108/02/2009-ST, stating that the situation in respect of landowners was different. The Tribunal concluded that the demand for the entire period could not sustain as the construction works were composite contracts. In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential reliefs. The decision was based on the nature of the construction services provided by the appellant and the applicability of relevant legal precedents.
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