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TMI Blog2024 (5) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 1.7.2010, the appellant is liable to pay service tax under the construction of residential complexes. The appellant has discharged service tax after 1.7.2010 till February 2012. However, the demand has been raised in the SCN denying the abatement claimed by the appellant. It is not disputed that the appellant has used materials as well as services for construction of the residential complex - the discussions and the finding of adjudicating authority that the appellant is not eligible for abatement in respect of works contract service is not legal and proper and cannot be sustained. The appellant has paid a sum of Rs.32,15,158/- after 1.7.2010 upto February 2012 as disclosed in ST-3 returns. The demand under Works Contract Service for the disputed period on construction of RCS denying abatement cannot sustain and requires to be set aside - The amount of Rs.32,15,158/- paid by appellant is not disturbed. Demand under Works Contracts Service provided for construction of Engineering College to M/s.KTVR Siddhammal Charitable Trust - HELD THAT:- It is explained by the Board in CBEC Circular No.80/10/2004-ST dt. 17.09.2010 that, when the building is solely used for educational purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or construction of engineering college by M/s.KTVR Siddhammal Charitable Trust. The appellant having provided construction of commercial nature though required to pay service tax for the period upto 2007-08 to 2009-10 for the construction of the commercial complex had not paid service tax. Show cause notice dt. 18.04.2013 was issued to the appellant proposing to demand the differential service ta x along with interest and also for imposing penalty. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 3.1 The Ld. Counsel Shri S. Durairaj appeared and argued for the appellant. In regard to the demand made in the SCN under Works Contracts Service for the construction of RCS it is submitted by the ld. Counsel that for the period upto 1.7.2010 the appellant is not liable to pay service tax. It is submitted that the appellant has provided service as a builder/promoter/developer of the residential projects and the Board vide its circular No. 108/02/2009 dt. 29.1.2009 has clarified that a promoter/ developer / builder is not required to pay service tax. 3.2 In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used by an educational institution, it cannot be considered to be used for commercial purposes. The Board Circular No.80/10/2004-ST dt. 17.09.2004 at para 13.2 was adverted to by the ld. Counsel. The decisions in the case of Commissioner of Service Tax Vs S.M. Sai Corporation - 2016 (42) STR 716 (Tri.-Mumbai) and Ratan Das Gupta Co Vs CCE 2017 (3) GSTL 247 (Tri.-Delhi) were relied by the learned counsel to submit that when the building is used for educational purposes, the construction of such buildings cannot be said to be commercial construction. For this reason, the demand made under Works Contracts Service alleging that the building is used for commercial purpose cannot sustain. Ld. Counsel prayed that the demand raised in regard to the construction of educational institutions may be set aside. 3.6 Ld. Counsel argued on the ground of limitation also. It is submitted that the appellant had paid the service tax for construction of residential complexes for the period upto 30.3.2009 and had stopped paying service only in accordance with the Board s circular. For the period w.e.f. 1.7.2010, the appellant started paying service tax availing abatement. All these facts would show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial complex. It contains 96 units. It is explained by the adjudicating authority in para 24.12 of the order that the appellant after conceptualizing the project, arranged for the sale of the undivided share of the land to the prospective purchasers (allottees) subject to the condition that the allottee should allow the flat to be constructed through the builder / promoter, viz. appellant. It is very much clear from the agreement itself that the appellant is a promoter/developer/builder of the residential project. As per circular No.108/02/2009 dated 29.01.2009, the Board has that a builder/promoter/developer is not liable to pay service tax for the period prior to 1.7.2010. The Circular reads as under : 3. The matter has been examined by the Board. Generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of agreement to sell . Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be held that such contracts were not covered by Section 65(105)(zzzh) during the period prior to 1-7-2010. 8. This view was followed by the Tribunal in the case of CC, CE Service Tax, Visakhapatnam-I Vs Pragati Edifice Pvt. Ltd. as reported in 2019 (31) G.S.T.L 241 (Tri.-Hyderabad). After taking into consideration the circular issued by the Board as well as the decision cited supra, we are of the view that the appellant is not liable to pay service tax under Works Contracts Service for construction of residential complex as builder/developer/promoter for the period upto 1.7.2010. 9. For the period w.e.f. 1.7.2010, the appellant is liable to pay service tax under the construction of residential complexes. The appellant has discharged service tax after 1.7.2010 till February 2012. However, the demand has been raised in the SCN denying the abatement claimed by the appellant. It is not disputed that the appellant has used materials as well as services for construction of the residential complex. The adjudicating authority has erroneously held that even if the materials are used for execution of works contract service, such materials are also leviable to service tax under the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government constructions would not be taxable. However, if such constructions are for commercial purposes like local government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to service tax. 13. It is explained by the Board in the aforesaid circular that, when the building is solely used for educational purposes, the levy of service tax is not attracted. We, therefore, find that the building having been used for educational purpose and being non-commercial purpose, the said construction activity cannot be subject to levy of service tax during the disputed period. 14. The Ld. Counsel has argued on the ground of limitation also. It has to be noted that the entire demand has been raised on the basis of figures taken from the accounts maintained by the appellant. There is no evidence of positive act of suppression of facts with intent to evade payment of service tax established against the appellant. Further, the appellant has been paying the service tax on RCS upto 2009 and had sto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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