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TMI Blog2024 (7) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010. The demand confirmed in the impugned order cannot sustain - Appeal allowed. - MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL) AND MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Shri. N. Anand, Advocate for the Appellant Shri. Dyamappa Airani, Authorised Representative for the Respondent ORDER M/s Gardencity Realty Pvt. Ltd., appellant is a builder of immovable property and have engaged various contractors for construction of residential projects. The department conducted audit of appellant s record in February 2010 and alleging that appellant either short paid or not paid service tax, show cause notice was issued on 18.01.2011 proposing demand of Service Tax of Rs.2,04,39,044/- with interest and penalty. Though the appellant had denied the allegation on the ground that as per the Circulars issued by Board from time-to-time builder/developer is not liable for payment of service tax and service tax on builder/developer is introduced w.e.f. 01.07.2010 only, however, as per the impugned order Adjudication Authority confirmed levies against the appellant. Aggrieved by the said order, present appeal is filed. 2. When the matter was taken up for hearing Learned Counsel reiterated the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers, the scope of Clause (zzzh) of Section 65(105) has been expanded and the explanation has been held as prospective thus the impugned order is unsustainable. The learned counsel further submitted that as per the various Circulars it is clarified that in a case, where the Builder/Promoter/Developer builds a residential complex by engaging a contractor for construction, the contractor shall be liable to pay service tax on the gross amount charged to the Builder/Promoter/Developer. The appellant also challenged the demand on the ground of limitation. It is submitted that the appellant has been corresponding and informing the Department about the facts and statutory provisions from time to time and in such a situation invoking the extended period of limitation as per Proviso to Section 73(1) read with Section 78 cannot be sustained. 4. The learned Authorised Representative (AR) for the Revenue, reiterated the findings in the impugned order. 5. We have heard both the sides and perused the records. 6. The learned counsel drew our attention to the Final Order of this Tribunal in the case of Commissioner of C.EX. S.T., Bangalore-I Vs. Keerthi Estates Pvt. Ltd. reported in 2019 (26) G.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na Homes, the Division Bench of the Delhi Tribunal in para 9 has held as under: 9. In view of the above, though in view of the Apex Court judgment in the case of M/s. Larsen Toubro Limited and Others Vs. State of Karnataka Others (supra), the agreements entered into by a builder/promoter/developer with prospective buyers for construction of residential units in a residential complex against payments being made by the prospective buyers in instalments during construction and in terms of which the possession of the residential unit, is to be handed over to the customers on completion of the residential complex and full payment having been made, are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts of a builder/developer with prospective customers for construction of residential units in a residential complex. Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65(105)(zzzh) w.e.f. 01.07.2010, and therefore, it has to be held that such contracts were not covered by Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consider such contracts as composite work contacts. Going by the ratio of Hon ble Supreme Court s decision in the case of CCE vs. Larsen Toubro (supra) held that works contract services were taxable only from 01.06.2007. In cases where the appellants do not receive any bookings or advances, the appellants complete the construction and offer the flats for sale. No service element exists. Services rendered by the appellants in the course of construction is a service but to themselves. Therefore, either way no tax can be levied on such activity. 8. Learned counsel relied on the judgment of the Tribunal in the case of Krishna Homes Vs. Commissioner of Central Excise, Bhopal reported in 2014 (34) S.T.R. 881 (Tri.-Del.). Relevant para of the judgment is reproduced below for ready reference:- 8 . Coming first to the question as to whether the activity of M/s. Krishna Homes and M/s. Raj Homes was taxable during the period of dispute or not, by Finance Act, 2005, Clause (zzzh) was introduced into Section 65(105) of Finance Act, 1994, so as to bring within the purview of the term taxable service , a service provided or to be provided to any person by any other person in relation to const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such residential complex, the contractor shall be liable to pay Service Tax on the gross amount charged for the construction service provided to the builder/promoter/developer under construction of complex service falling under Section 65(105)(zzzh) of the Finance Act, 1994 and that if no person is engaged by the builder, promoter, developer for construction work who undertakes construction work on his own without engaging the services of any other person than in such cases, in absence of the service provider and service recipient relationship, the question of providing taxable service to any person by any other person does not arise. W.e.f. 01.07.2010 an explanation was added to Section 65(105)(zzzh) which was as under :- Explanation. - For the purposes of this sub-clause, the construction of a new building which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorized by the builder before grant of completion certificate by the authority competent to issue such certificate unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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