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TMI Blog2024 (4) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... lant for the impugned flats constructed prior to 01.07.2010, having less than 12 units / flats and hence, the refund claimed by the appellant was very much in order; the revenue has erred in rejecting the valid refund claim and consequently, the impugned order cannot sustain. The impugned order is set aside - appeal allowed. - Hon ble Shri P. Dinesha , Member ( Judicial ) And Hon ble Shri M. Ajit Kumar , Member ( Technical ) Shri Sudhir , Chartered Accountant for the Appellant Shri M. Ambe , DC ( AR ) for the Respondent ORDER Per P. Dinesha This appeal is filed by the appellant against Order in Appeal No. 274/2019 (CTA II) dated 25.9.2019 passed by the Commissioner of Central Tax (Appeals II), Chennai. 2. Facts that emerge from the impugned order are that there was a development agreement dated 02.05.2008 between the appellant and the developer for construction of residential complex/apartment, in terms of ₹. 29,31,752 was paid to the developer towards service tax. Believing that there was no tax liability, the appellant filed a refund application claiming refund of the above service tax paid to the developer, which resulted in the issuance of a show cause notice by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the only issue to be decided by us is, whether the rejection of refund application by the revenue is in order? 9. Facts are not in dispute; the appellant is a land owner, entered into a development agreement with the developer for construction of residential apartment consisting of G + 3 units, of which, two units/flats were allotted to the land owner and the remaining G +1 units to the developer. It is the case of the appellant that the development agreement which is the foundation, was entered into on 02.05.2008, which was much prior to the insertion of the explanation w.e.f. 01.07.2010. 10. The appellant also submitted that their case is supported by Notification No. 36/2010 ST dated 28.06.2010, which specifically exempted the tax liability on the amounts received prior to 01.07.2010 towards any service provided after that date; the Board had also issued a Circular No. 151/2/2012 ST dated 10.2.2012 clarifying that the consideration for the builder / developer is the land/ developmental rights. Further, tax of service of construction is to be determined at the time of receiving consideration itself, in terms of Rule 6 of the Service Tax Rules, 1994 and accordingly, the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a taxable service; and (b) construction service provided by the builder/developer. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: (a) from landowner: in the form of land/development rights; and (b) from other buyers: normally in cash. (A) Taxability of the construction service : (i) For the period prior to 1-7-2010 : construction service provided by the builder/developer will not be taxable, in terms of Board s Circular No. 108/2/2009-S.T., dated 29-1-2009 [2009 (13) S.T.R. C33]. The Circular No.108/2/2009-ST dt. 29.01.2009 which has been reiterated in the aforesaid circular dated 10.02.2012, reads as under : Circular No. 108/2/2009-S.T., dated 29-1-2009 F.No. 137/12/2006-CX.4 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Imposition of Service tax on Builders - Regarding. Construction of residential complex was brought under service tax w.e.f. 1-6- 2005. Doubts have arisen regarding the applicability of service tax in a case where developer/builder/promoter enters into an agreement, with the ultimate owner for selling a dwelli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of self-service and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter / builder / developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of residential complex . However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax. 4. All pending cases may be disposed of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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