9911796707
TMI Blog2019 (10) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... g with some common facilities and has more than 12 residential units. For this reason, we find that the project Nilgiri Homes qualifies as residential complex. It is not in dispute that the services were rendered in the form of works contract and therefore are chargeable to service tax in the works contract service. Nature of the contract on which service tax is proposed to be charged - HELD THAT:- The explanation to section 65(91a) categorically states that personal use includes permitting the complex for use as residence by another person on rent or without consideration. Therefore, it does not matter whether the individual buyer uses the flat himself or rents it out. There is nothing on record to establish that the individual buyers do not fall under the aforesaid explanation - thus no service tax is chargeable from the appellant on the agreements entered into by them with individual buyers for completion of their buildings as has been alleged in the SCN. Consequently, the demand needs to be set aside - Accordingly, the demands for interest and imposition of penalties also need to be set aside. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... )(zzzza) of the Finance Act, 1994. It is further stated in the SCN that an optional composition scheme for payment of service tax in relation to works contract service has been provided vide notification 32/2007-ST dt.22.05.2007 effective from 01.06.2007 under Works Contract Service (Composition Scheme for payment of Service Tax) Rules, 2007. Under the said scheme, the assessee has to pay an amount equal to 2% of the gross amount charged for works contract including the VAT or sales tax paid. Further, with effect from 01.03.2008 the aforesaid rate of 2% has been enhanced to 4% vide notification 07/2008-ST dt.01.03.2008. The department obtained from the appellant amounts received by them and reckoned this amount as total consideration received by them for the service and calculated an amount of service tax payable. The assessee has already paid some amount of the service tax. It is further alleged in the SCN that the appellants have not been discharging their service tax properly and only on verification of records, these facts came to light. Accordingly, the SCN proposed to demand the above amounts as service tax along with interest and further proposed to impose penalties under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building or buildings have more than 12 residential units each the same cannot be called as residential complexes. For this reason, they are not liable to pay service tax on the services rendered. He relies on the law of Macro Marvel Projects Ltd v Commissioner [2008 (12) STR 603 (Tribunal)]. Para 2 and 3 of which read as follows: "2. The appeal is against demand of service tax of ₹ 15,63,145/- for the period 16-6-2005 to 30-11-2005 under the head "construction of complex" service under Section 65(30a) of the Finance Act, 1994. The lower authorities have also imposed a penalty on the assessee under Section 76 of the said Act. The impugned demand is on the amount collected by the appellants from their clients as consideration for construction and transfer of residential houses. It is the case of the appellants that the work done by them fell within the ambit of 'works contract', which became taxable only with effect from 1-6-2007 vide Section 65(105)(zzzza) of the Finance Act, 1994. It is also submitted that service tax cannot be levied from the appellants under any other head for any period prior to 1-6-2007. We have heard the learned Jt. CDR also, who submits that the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction of individual residential units to be subject to levy of service tax. Unfortunately, this aspect was ignored by the lower authorities and hence the demand of service tax. In this view of the matter, we are also not impressed with the plea made by the appellants that, from 1-6- 2007, an activity of the one in question might be covered by the definition of 'works contract' in terms of the Explanation to Section 65(105)(zzzza) of the Finance Act, 1994 as amended. 'According to this Explanation, 'construction of a new residential complex or a part thereof' stands included within the scope of 'works contract'. But, here again, the definition of "residential complex" given under Section 65(91a) of the Act has to be looked at. By no stretch of imagination can it be said that individual residential units were intended to be considered as a 'residential complex or a part thereof'. These observations of ours with reference to 'works contract' have been occasioned by certain specific grounds of this appeal and the same are not intended to be a binding precedent for the future. 3. For the reasons already noted, we set aside the impugned order and allow this appeal. The stay appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05,800 Less: Sale of land 80,04,000 1,31,71,000 2,11,75,000 Less: VAT, Registration Charges and other non-taxable Receipts 13,93,710 37,11,713 51,05,423 Taxable Value 1,08,92,375 4,85,33,002 5,94,25,377 ST Liability @4.12% 4,48,766 19,99,560 24,48,326 Service Tax paid 23,80,124 Payable/(Excess paid) 68,202 5) He fairly submits that the above computational dispute was agitated by them before the first appellate authority who remanded the matter back to the lower authority on this ground. He also argues as a third alternative argument that the contracts entered into with individuals for completion of the semi finished houses is meant for personal use and therefore, is excluded from section 65(91a). Even on this ground the demand cannot be raised on such agreements. As far as the construction done prior to sale is concerned, it is a self service and is not chargeable to service tax and there is also no demand on this count. 6) Lastly, he would argue that demand of interest and penalties are not sustainable. 6. Learned departmental representative reiterates the findings of the lower authority and take us through the agreement which the appellant had entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form part of the residential complex. Further, he would submit that in both the above cases, there was specific finding of the Tribunal that there was no residential complex built in those projects. In the present cases, both from the records and from the agreement it is evident that a plot of land is taken by the appellants and developed into a complex of individual residential units with some common areas. Therefore, the appellant's activity qualifies as residential complex services and accordingly, demands are sustainable. Therefore, the impugned order needs to be upheld and the appeal needs to be rejected. 7. Insofar as the question of computation is concerned, he would submit that the first appellate authority has already remanded the matter to the original authority for calculation. 8. We have considered the arguments on both sides and perused the records. We find from the records that the appellant has taken a piece of land and developed that into a complex of individual residential units in the form of row houses with some common areas for parking, roads, etc. We have also seen the photographs produced by the appellant. These clearly indicate that they are row houses wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind the explanation to section 65(91a) was not considered in the aforesaid judgments. This explanation categorically indicates that single houses also qualify as residential units. It is inconceivable that there could be 12 single houses in a single building. The only logical understanding of the residential complex is that there should be 12 or more residential units either in the form of flats or as single houses in the entire complex. Evidently, in this particular case, the complex comprises of row houses as a gated community along with some common facilities and has more than 12 residential units. For this reason, we find that the project "Nilgiri Homes" qualifies as residential complex. It is not in dispute that the services were rendered in the form of works contract and therefore are chargeable to service tax in the works contract service. 11. The second question is the nature of the contract on which service tax is proposed to be charged. The SCN itself states that the plots along with semi-finished buildings were sold to the buyers under the sale agreement. Thereafter, a separate agreement was entered into with the individual home owners for completion of the building/str ..... X X X X Extracts X X X X X X X X Extracts X X X X
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