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TMI Blog2023 (10) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... R, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Hardik V Vohra, Advocate appeared for the Appellant Shri A K Samota, Superintendent (Authorized Representative) for the Respondent ORDER The issue involved is that whether the appellant is liable to pay the service tax on the construction of residential complex in respect of works contact for construction of residential complex under GnnRUM Scheme for Surat Municipal Corporation. 2. Shri Hardik V Vohra, learned counsel on behalf of the appellant, at the outset, submits that the issue is no longer res-integra as this Tribunal has decided in various judgments. He placed reliance on the following judgments: D H Patel vide Final Order No. 10853 of 2023 in ST appeal No. 11548 of 2013. Rjp Infrastructure Pvt. Ltd. vide Final Order No. 11880 of 2023 dated 05.09.2023 in appeal No. ST/13749/2014. 3. Shri A.K. Samota, learned Superintendent (AR) appearing on behalf of the revenue reiterates the findings of the impugned order. 4. On careful consideration of the submission made by both the sides and perusal of records, we find that the works contract service of construction of residential compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion thereof which reads as under : Residential Complex has been defined under section 65(91a) of the Finance Act 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 spaces community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. Explanation : For the removal of doubts, it is hereby declared that for the purposes of this clause. (a) personal use includes permitting the complex for use as residence by another person on rent or without consideration; (b) residential unit means a single house or a single apartment intended, for use as a place of residence; The perusal of the above defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allottee is paying the nominal rent or without consideration. 5 . From the record, it appears that the Notification No. 28/2010-S.T., dated 22nd June, 2010, clarified that the services is provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana are exempted from the clutches of Service Tax. Further, vide F. No. 137/26/206-CX.-4, dated 5th July, 2006, it was clarified that Service Tax would not be leviable on construction of complexes under question if their lay out does not require approval by an authority under any law for the time being in force. From the letter dated 30-1-2004 issued by the M.P. Urban Development Department, it appears that the said construction was made under Rajiv Gandhi basti Vikas karyakram which was the Central sponsored scheme and the same is exempted from service tax as per Circular No. 125/2010-S.T., dated 30th July, 2010. 5 . In the light of above discussion and by considering the facts and circumstances of the case, we are of the view that the M.P Government has constructed the accommodation for the gandi basti people under the Central sponsored scheme which is attempted to clean India as per Prime Minister s mission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or on behalf of Government. 5., 6. . .. 7. On perusal of the records, we find that the adjudicating authority has confirmed the demands on the appellants on the ground that they are providing services of Commercial or Industrial construction services which are covered under section 65(30 a) of the Finance Act, 1994 as amended and subsequently amended as per section 65. We find that there is no dispute as to the fact that buildings constructed by the appellant herein are allotted to the police personnel and the personnel working in jail department of the Government of Gujarat, the only point which requires to be considered in this case is whether the appellant herein has rendered services to a personnel who has not occupied the said dwellings. We find that an identical issue in respect of Tamilnadu Police Housing Corporation Ltd. case came up before the Tribunal in the matter of S. Kadirvel (supra). In that stay order, the bench held as under :- 4. After considering the submissions, we have found prima facie case for the appellant inasmuch as it is not in dispute that the houses constructed by the Tamil Nadu Police Housing Corporation Ltd., are owned by the State Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the residential complex was built for M/s. ITC Ltd. and appellant was the main contractor. Appellant had appointed sub-contractors all of whom have paid the tax as required under the law. The question that arises is whether the appellant is liable to pay service tax in respect of the complex built for ITC. From the definition it is quite clear that if the complex is constructed by a person directly engaging any other person for design or planning or layout and such complex is intended for personal use as per the definition, service tax is not attracted. Personal use has been defined as permitting the complex for use as residence by another person on rent or without consideration. In this case what emerges is that ITC intended to provide the accommodation built to their own employees. Therefore it is covered by the definition of personal use in the explanation. The next question that arises is whether it gets excluded under the circumstances. The circular issued by C.B.E. C. on 24-5-2010 relied upon by the learned counsel is relevant. Para 3 of this circular which is relevant is reproduced below : 3. As per the information provided in your letter and during discussions, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered view that the issue is no longer res-integra. The other judgments cited by the learned Counsel also support their case. Accordingly, the assessee s Appeal No. ST/10464/2015-DB is allowed and Revenue s Appeal No. ST/11498/2016 is dismissed. 05 . This issue is no longer res integra in the light of the judgments relied upon by the appellant accordingly, the impugned order is set aside. Appeal is allowed. (c) In the case of M/s. Natvar Construction Co. (supra) the Tribunal passed the following order:- 4 . On careful consideration of the submissions made by both the sides and perusal of record, we find that in the present case the demand was raised on the following:- (a) Construction of residential complex for GSPHCL, (b) Construction of residential complex service provided to Surat Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission (JnNRUM) We find that the issue of levy of service tax on the construction service in respect of above categories have been categorically held as non taxable. Relevant judgments are reproduced below. (a) In the case of Jethanand Arjundas Sons (supra), the Tribunal held as under: 7. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (b) residential unit means a single house or a single apartment intended, for use as a place of residence; The perusal of the above definition makes it dear that the complex which is constructed with an intention for personal use as residence by a person who is directly engaging any other person for designing/planning of layout and the construction of such complexes out of the ambit of such construction and thus from taxability. We draw the support from the case of C.C.E., Aurangabad v. Mall Enterprises - 2016 (41) S.T.R. 119 (Tri.-Mum.) wherein it was held that not only residential complex is designed or laid out by another person are excluded from the definition but also the ones intended for personal use of such person i.e. the owner of the complex. In another case titled as Nithesh Estates Limited v. C.C.E., Bangalore, 2015 (40) S.T.R. 815 wherein it was held that the construction of residential complex for ITC (in that case) intended to provide accommodation built for own employees, activity was covered by definition of personal use in Explanation to Section 65(91A) of Finance Act, 1994. Hence, the assessee s activity falls under exclusion of that Section and as suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation for the gandi basti people under the Central sponsored scheme which is attempted to clean India as per Prime Minister s mission. 6. When it is so, then we find no merits in the impugned order as no service tax is leviable in the instant case. Hence, the impugned order is set aside. The appellant will get the relief accordingly. From the above judgment it can be seen that the identical fact is involved in the above judgment and in the case in hand in as much as in both the cases the construction service was provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana. On this common fact in the above judgment it was held that the service tax is not leviable to such project. Hence, the ratio of the above judgment is directly applicable in the present case. 12 . As per our above discussion and finding which gets support of above cited judgments, the impugned order is clearly not sustainable, hence the same is set aside. The appeal is allowed with consequential relief, if any arise, in accordance with law. 5. As regards the service provided by the appellant to GSPHCL, the issue has been considered in the following judgments. (a) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) personal use includes permitting the complex for use as residence by another person on rent or without consideration; (b) residential unit means a single house or a single apartment intended for use as a place of residence; 7 . Undisputedly, the appellants have entered into an agreement with TNPHCL for providing services in relation to construction of residential complex. However, these are meant for use of police personnel. The said issue was considered by the Tribunal in the case of Nithesh Estates (supra), wherein the Tribunal has observed as under:- 7.1 In this case there is no dispute and it clearly emerges that the residential complex was built for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also has clarified that in cases like this, service tax need not be paid by the builder/developer who has constructed the complex. If the builder/developer constructs the complex himself, there would be no liability of service tax at all. Further in this case it was different totally, the appellant, has engaged sub- contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax. 8 . The said decision was followed by the Tribunal in the case of Lanco Tanjore Power Co. Ltd. (supra) wherein the Tribunal discussed as under:- 7. Construction of residential complex activity was carried out by the assessee for M/s. Lanco. It is submitted that such residential units were constructed for use as quarters of the employees of M/s. Lanco. It is evident from the facts of the case that M/s. Lanco has engaged the assessee with the specific purpose of construction of such residential units which are meant for personal use of the employees of M/s. Lanco. We extract below the statutory definition of section 65(91a) of the Finance Act, 1994:- Residential complex means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod after 01.06.2007 is concern it is seen that the definition of the above works contract service reads as under: Works contract , for the purposes of section 65(105)(zzzza), means a contract wherein,- (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government officers. Further, the residential complexes so built are intended for the personal use of the GOI which includes promoting the use of complex as residence by other persons (i.e. the Government officers or the Ministers). As such the GOI is the service receiver and NBCC is providing services directly to the GOI for its personal use. Therefore, as for the instant arrangement between Ministry of Urban Development and NBCC is concerned, the Service Tax is not leviable. It may, however, be pointed out that if the NBCC, being a party to a direct contract with GOI, engages a sub-contractor for carrying out the whole or part of the construction, then the sub-contractor would be liable to pay Service Tax as in that case, NBCC would be the service receiver and the construction would not be for their personal use. It can be seen that if the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. It is quite clear that C.B.E. C. also has clarified that in cases like this, service tax need not be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 8. We have gone through the case law relied upon by the respondents where a similar case has been dealt with by the Tribunal. Following the decision of the Tribunal in Nithesh Estates Ltd. (supra), we find no reason to interfere with the impugned orders which are sustained and the appeals filed by Revenue are rejected. 4.4 Similar view has also been taken in the case of Khurana Engineering 2010 (11) TMI 81 CESTAT Ahmd, wherein following has been observed: 2. Learned advocate on behalf of the appellants, first of all submitted that the service was provided by the appellant to Govt. of India for providing the same as residential accommodation for the employees of the Income Tax department. He drew our attention to the definition of the construction of complex services given under the clause (30a) of Section 65 to submit that personal use, according to the definition includes permitting the complex for use as residence by another person on rent or without consideration. In view of the definition of Personal Use in the definition of Construction of Complex services, the services provided by the appellant is covered by exclusion, which provides that definition of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the notice issued by the CPWD inviting tenders. The tender starts with words Tenders are invited on behalf of the President of India . Further, we also find that the guarantee executed by the contractor and agreement entered by the contractor have been accepted by CPWD for and on behalf of the President of India. Learned DR also fairly admitted that he has not got any clarification from the department as to whether there is any evidence to show that CPWD and Income Tax departments are separate entities and have to be treated as separate entities. It is well known that various departments of Govt., of India act on behalf of the President of India and therefore, it cannot be said that CPWD can be equated with NBCC which is a Public Sector under taking. It is also well settled that Public Sector undertakings are not considered as Govt., departments and also cannot be considered as STATE . Further, learned DR also could not show whether there was any agreement between Income tax department and CPWD for the purpose of construction of residential complex. Invariably when two parties are independent entities, there would be an agreement. Absence of any agreement between CPWD and I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation given for Personal use in the definition. In this case the CPWD has engaged the appellant for construction of residential complex for giving it on rent to the employees of Income Tax department and therefore this service cannot be included in the definition of residential complex services. It is basically the case of one department taking the help of another department to get the work done basically because of specialization of that department in preparing documents and get the work executed. 3. We also find alternative submissions made by the learned advocate are to be sustained. The first alternative submission made was that the show cause notice was issued on 4-10-2007 whereas, the service tax was payable for the period from 16-6- 2005 to 30-7-2007 and therefore, a portion of the demand is time barred. Even if a view is taken that CPWD is to be treated as separate entity, in our opinion appellant would be justified to entertain a belief that CPWD and Income Tax department are to be treated as part of the Govt. of India and therefore, services provide by him would not be liable to service tax. Further, as submitted by the appellant in his submission, the agreement also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside and appeal is allowed. 6 . In view of the above judgments, in respect of construction service provided to the service recipient M/s. GSPHCL and Surat Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission are non-taxable. Following the above decisions, we are of the view that demand in the present case is not sustainable. The impugned order is set-aside and the appeal is allowed. 5. From the above decisions it can be seen that the construction of Complex under the same scheme has been considered by this Tribunal and viewed that such construction of Complex is not liable to service tax. Therefore, following the above decisions of this Tribunal, in the present case also the impugned order is not sustainable hence the same is set-aside. The appeal is allowed. The similar issue has been considered in the case of cited judgment of DH Patel (supra). Considering the above decisionsby this Tribunal, it is settled that construction of residential complex under GnRUM Scheme is not liable to service tax. Accordingly, the demand in the present case is not sustainable. Hence, the impugned order is set aside. Appeal is allowed. (Pronounced in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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