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TMI Blog2016 (2) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants. Therefore, the transaction between appellants and vendor does not fall within the exception to the `declared service.' The appellants claim that theirs is a single residential unit. However, a perusal of the sale agreement reveals transfer of land and built-up facilities along with the constructed house; this would include a share in the common roads, community facilities and other land that is not assigned specifically to a house owner. That is part of the agreement for transfer and the consideration includes these assets. The residential unit, therefore, cannot but be part of a complex. Hence, the exemption under notification no. 25/2012-ST dated 20th June 2012 is not available to the appellants. There can be no doubt that the agreement between the appellants and the vendor is for transfer of immoveable property by way of sale. The vendor renounces all rights to any part of the property that is transferred. The transaction is squarely covered by the exclusion from service and, therefore, outside the ambit of tax. The tax collected from the appellants by the vendor and deposited in the government account is without authority of law and is liable to be refunded under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such a way that it could become three separate units; and on the further ground that the project of vendor was not restricted to their residential unit but was a larger complex of which their residence was only a part. 4. In the impugned order, the first appellate authority held that vendor/promoter had constructed an entire complex and, therefore, discarded the claim of the appellants that house was not liable to service tax. Relying on the presumption that the project must have been in execution since 2010, reference was made to section 65(105)(zzzh) of Finance Act, 1994 and definitions in section 65(91a) of Finance Act, 1994 to conclude that the house was part of complex containing more than twelve units; that building permissions were obtained for the whole and not separately for the house; and, there being no contract between the builder and appellant, it was not possible to accept their claim of having contracted for construction of a single residential unit. It goes on to argue that the taxability and classification had been settled by the promoter during the construction before the appellants entered into the picture and it was not open to the buyer to seek an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of tax is a necessary condition for refund but not evidence of deposit. The original authority should have limited its satisfaction to the tendering of tax amount by the appellants to the supplier which is the condition in section 11B of Central Excise Act, 1944. By the imaginative exclusion from the definition of `single residential unit' in 2(ze) of notification no. 25/2012-ST dated 20 th June 2012, the original authority has clearly exhibited its disinclination to consider the refund claim on merit i.e. the taxability of the transaction. It is not the plan of the house or its potential that determines coverage under this definition. In practical terms, the specific transaction entered into is that of the appellants who are a family. The definition does not encompass determination of size, the number of doors or the adaptability at a future date; a future transaction will be adjudged for taxability only when it occurs. These flaws in the order of the original authority have not been addressed by the first appellate authority. These findings are not tenable in resolution of the dispute before the Tribunal. 6. The finding in the impugned order that the taxability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are many buildings in a complex as long as each has no more than the stipulated twelve units. The decisions in Commissioner of Service Tax v. Macro Marvel Projects Ltd [2012 (25) STR J 154 (SC)], Macro Marvel Projects Ltd v. Commissioner of Service Tax [2008 (12) STR 603 (CESTAT Chennai)], AS Sikarwar v. Commissioner of Central Excise, Hyderabad [2012 (28) STR 479 - CESTAT Delhi ], Sai Teja Construction v. Commissioner of Central Excise, Hyderabad [2013 (31) STR 291 - CESTAT Bangalore] and Arihant Construction v Commissioner of Central Excise, Jaipur II [2013 (30) STR 64 (Tri Delhi)] were cited in support. Attention was also drawn to circular no. 201/01/2014-CX.6 dated 20th dune 2014 that was allegedly ignored by the two lower authorities. Citing notification no. 25/2012-ST dated 20th June 2012, appellant contends that paragraph 14(b) exempts single residential unit otherwise than as a part of a residential complex from the ambit of service tax. It was also submitted that all single residential units, whether single-storeyed or multi-storeyed, are eligible for the cited exemption and that being provided with access to common facilities in return for monetary contribution f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the need to fence out some beneficiaries of the service from the tax net. The findings of the two lower authorities appear to have stemmed from this dilemma. 12. Shelter is a fundamental, and `age old , human need. For many, it is a dream that takes time for fulfillment. Taxing of such a need would not only be heartless but also pit the state against its citizens. More so, considering the concept of tax on services. Generally, the service sector has emerged in consequence of the awareness that it is more economically viable to outsource many activities that were otherwise being performed within. It is those outsourced services that are sought to be taxed. Implicit in such tax is the availability of the option of self performance of the activity. Construction is an enterprise that cannot, except in very rare circumstances, lend itself to exercise of such an option. The scale, complexity and professional expertise required put it beyond the scope of that option. Especially, for individuals who seek fulfillment of their housing dreams. Tax provisions are devised to provide escapement to those who have such aspirations without providing a loophole for those who are intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at service of a developer or contractor availed for constructing a residence is intended to be exempt from tax even though it is covered for tax liability as a `declared service,' This exemption does not extend to residence constructed as part of a complex. The specific role of developer is to procure services in common for those who intend to occupy the complex and a residential complex will contain within it more than one residential unit. As the particular service rendered by developer in a complex, other than bundling the various input services, is the aggregation of residential owners on a common property, the perceptible legal distinction between the single unit and unit in a complex appears, from the above definitions, exemption and the tax objective, to be the transfer of share of land and constructed facilities in common as an undivided share to the buyer who has been making over consideration before issuance of certification of completion. 14. The vendor, in the present instance, is liable to be taxed on any activity outsourced by it,in undertaking any construction. The vendor was not in possession of the completion certificate at the time of receipt of considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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