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TMI Blog2024 (5) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... s clarified that developer/builder/promoter is not required to pay service tax on these construction services prior to 1.7.2010 - The Tribunal in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] has applied Board s circular and discussed the very same issue after taking note of the Explanation introduced in Section 65 (105) (zzzh) of the Finance Act, 1994. The Board has specifically stated that developer/builder/promoter would be liable to pay service tax only after 1.7.2010. The demand of service tax on the consideration received from land owner (land owner s built up area) are demanded for various residential projects under construction of Residential Complex Services and Works Contract Services. The issue as to whether promoter/builder/developer is liable to pay service tax prior to 1.7.2010 was examined in the case of M/s.Krishna Homes and also followed and elaborately discussed in the case of COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, VISAKHAPATNAM - I VERSUS M/S PRAGATI EDIFICE PVT LTD (VICE-VERSA) [ 2019 (9) TMI 792 - CESTAT HYDERABAD] . The Board Circular also clarifies the same. The other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ika Chandrasekar, Advocate, for the Appellant Shri Anoop Singh, Authorised Representative for the Respondent ORDER Brief facts are that appellant is engaged in the business of providing construction services such as construction of residential complex, construction of commercial or industrial buildings and are also registered with the Service Tax Department. On the intelligence gathered that the appellant has not discharged appropriate service tax on land owner share on the different projects, the Department conducted investigations. It was observed by the department that the appellant though discharged service tax on developer's share, i.e; on the flats retained by the developer as partner of the JV, had not discharged service tax on the land owner's share. Later, they discharged service tax in respect of the land owner share on 33% after availing abatement. The department was of the view that the appellant has to discharge service tax on the entire amount in respect of land owner share, as they have provided services to land owners under construction of Residential Complex Service, Commercial or Industrial Construction and 'Works Contract Services. 2. It was also noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The property remains under 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." 5.2 It is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on services. 5.5 The Ld. Counsel relied upon the decision in the case of Hallmark Infrastructure Pvt. Ltd. Vs CGST & Central Excise, Chennai South vide Final Order No.43116 dt. 18.12.2018. The decision in the case of Radius Corporation Ltd. Vs CCE Raipur - 2014 (33) S.T.R. 416 (Tri.-Del) was also relied to argue that in the said case the assessee argued that they provided Site Formation service and not construction service. The Tribunal observed that the agreement is for Engineering, Procurement and Construction and therefore the service provided cannot be Site Formation Service. 5.6 The Ld. Counsel submitted that there are no grounds for invoking the extended period. The appellant who is a developer had already discharged service tax of 33% on land owner's share. Further, the Board's circular was issued with regard to service tax liability of developer/builder/promoter which clarified that there is no liability to pay service tax. The issue being interpretational in nature, the demand invoking extended period cannot sustain. Ld. Counsel prayed that the appeal may be allowed. 6. Ld. A.R Shri Ambe appeared and argued on behalf of Sri M. Selvakumar. It is submitted by the Ld. A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential Complex Services. Annexure B-III is demand of service tax on Land owner's share under Works Contract Service. Annexure B-IV is again demand of service tax on Land owner's share under Works Contract Services. On examination of these details in the Annexure, it is seen that demand of service tax on the consideration received from land owner (land owner's built up area) are demanded for various residential projects under construction of Residential Complex Services and Works Contract Services. The issue as to whether promoter/builder/developer is liable to pay service tax prior to 1.7.2010 was examined in the case of M/s.Krishna Homes (supra) and also followed and elaborately discussed in the case of M/s.Pragathi Edifice Pvt. Ltd. (supra). The Board Circular also clarifies the same. The other demand is under Commercial Construction Service. The Tribunal in the case of Real Value Promoters (supra) had held that the demand cannot be raised under CCS, RCS, of CICS for the period prior to 1.7.2012. This view was followed in M/s.Jain Housing Corporation (supra) which has been upheld by Hon'ble Apex Court. The demand of service tax under construction of Residential Complex Services, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selves. Further neither the agreement for sale had not seen light of the day, nor were the buyers visible on the horizon, at the time when the site formation etc of the land was carried out by the appellant." 13. After taking note of the facts and the case law cited supra, we are of the considered view that the developer charges cannot be subject to service tax under Site Formation Service. 14. Ld. Counsel has argued on the limitation also. During the relevant period, the issue of demand of service tax on the promoter/builder/developer for various construction activities was pending before various forum. The situation necessitated the Board to issue a Circular to clarify as to whether developer is liable to pay service tax. The relevant part of the Circular has already been reproduced above. All these would go to show that the issue was debatable and interpretational in nature. Further the appellant has already discharged service tax on the 33% of the consideration received on the land owner share (flats). All these would establish that there was no suppression of facts with an intent to evade payment of service tax. The demand invoking extended period cannot sustain. The issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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