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TMI Blog2014 (4) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... ving transfer of property under the AP VAT Act and the appellant is engaged in the construction residential complex. Therefore, we find that the activity is clearly covered by works contract service. Revenue contended that, appellants were not eligible for composition scheme under works contract in view of the fact that the appellants had availed CENVAT credit on inputs and subsequently the appellants had already paid tax at the normal rate in the year 2009. However, ongoing through para 10 of the impugned order, it was seen that this payment was collected and paid towards preferential allocation and development service and not on the residential complex service. As regards CENVAT credit, the appellant cannot take credit on inputs and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/land owners to develop properties on property sharing basis ratio engaging independent architects and reputed construction contractors for actual design and construction work, and enters into agreements joints with land owner and prospective buyers and conveys the properties eventually constructed to the buyers. Appellant paid VAT as well as service tax under composition scheme availing CENVAT credit on input services. Taking a view that the appellant is rendering residential complex construction service and the classification of service as works contract service adopted by them for payment of service tax is not correct, proceedings were initiated for recovery of service tax for the period from 2009-10 to 2011-12 which has culminated in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e several works contracts in respect of one complex. He has observed that the works contract service would be applicable only when the entire complex is constructed for one service recipient. On this ground he has held that the service cannot be classified as works contract service and has denied the composition scheme. 4. We find that the submissions by the learned counsel, residential complex is defined in Section 65(91a) of the Finance Act, 1994 as follows:- (91a)? residential complex means any complex comprising of - (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space, community hall, common wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel. We are unable to agree or we are unable to find any justification for taking a stand that just because agreements are entered into with individual, the service goes out of the definition of works contract. 6. The definition of works contract in Section 65(105)(zzzza) clearly covers construction of new residential complex or a part thereof. Therefore in the case of construction of a new residential complex, if the contract involves transfer of property in the execution of such contract leviable to tax sale of goods, can be classifiable as works contract. In this case, the appellants have registered for payment of tax in respect of portion involving transfer of property under the AP VAT Act and the appellant is engaged in the construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... characteristics of works contract are not involved in that transaction. When the transaction involves the activity of construction, the factors such as, the flat purchaser has no control over the type and standard of the material to be used in the construction of building or he does not get any right to monitor or supervise the construction activity or he has no say in the designing or lay-out of the building, in our view, are not of much significance and in any case these factors do not detract the contract being works contract insofar as construction part is concerned. 100. We have no doubt that the State legislatures lack legislative power to levy tax on the transfer of immovable property under Entry 54 of List II of the Seventh Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts is permissible. 7. The learned AR fairly agreed that the decision of the Hon ble Supreme Court may cover the case of the appellants. However, he pointed out that the appellants were not eligible for composition scheme under works contract in view of the fact that the appellants had availed CENVAT credit on inputs and subsequently the appellants had already paid tax at the normal rate in the year 2009. However, ongoing through para 10 of the impugned order, it was seen that this payment was collected and paid towards preferential allocation and development service and not on the residential complex service. As regards CENVAT credit, the appellant cannot take credit on inputs and capital goods only and not on input services. As rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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