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TMI Blog2025 (1) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... t Contract, in terms of agreement dated 14.04.2004 entered by the Appellant with the said contractor. Therefore, any demand of service tax from the Appellant who is the promoter is not legally proper and sustainable in the eyes of law.
Levy of penalty - HELD THAT:- The penalty imposed is unjustified.
Conclusion - The appellant was not liable for service tax under the "Construction of Residential Complex Service" and that the penalty imposed was unjustified.
Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... [2006 (14) Scale 267] and Union of India Vs. Kamalakshi Finance Corporation Limited [1991 ELT 433 SC]. ii. It was contended that the Appellant as a developer of property on the land purchased by them by engaging a contactor to render construction service could not be held liable for payment of service tax as they had sold only completed flats. It was further submitted that the impugned order was passed without considering the clarification issued by CBEC in TRU Circular F.No. 332/35/2006-TRU dated 01.08.2006, Master Circular No. 96/07/2007 dated 23.08.2007 and the clarification issued in respect of contractor engaged cases in Circular No. 108/02/2009 dated 29.01.2009. iii. It was submitted that the non- payment of stamp duty for registering a constructed flat could not make the transfer of property to become a provision of service. iv. It was submitted that the adjudicating authority had dismissed the decision of the jurisdictional high court in Jain Housing Vs. CST., Chennai [2014-TIOL- HC-Mad-ST] by holding that the issue had not attained finality. Further, it was submitted that a decision of the Hon'ble High Court of Gauhati in the case of Magus Construction Pvt. Ltd. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also submitted that the contractor Viz. M/s. Golden Homes Pvt. Ltd. was liable to bear the entire liability of Service Tax as the Appellant had resorted to mere sale of UDS to buyers whereas the service relating to construction of the residential complex was rendered by the said contractor and in this regard relied on various CBEC circulars and clarifications. 9. We find the issue is no more res integra as this Tribunal had in respect of the same issue involving the Appellant, for earlier period from 16.06.2005 to 31.03.2009 had vide Final Order No. 40112/2009 dated 17.01.2009 set aside the demand of service tax on construction of residential complex service. The relevant portion of the said order is reproduced herewith for the sake of convenience: - "5. The foremost issue is with regard to the demand raised under construction of residential complex service. It is not disputed that such construction activities involve both supply of labour as well as element of service and contracts are composite in nature. The demand prior to 1.6.2007 cannot sustain as per the decision of Apex Court in Larsen & Toubro Ltd. (supra). The Tribunal in the case of Real Value Promoters (supra) had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential units. A complex constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex intended for personal use as residence by such person has been excluded from the ambit of service tax. 2. A view has been expressed that once an agreement of sale is entered into with the buyer for a unit in a residential complex, he becomes the owner of the residential unit and subsequent activity of a builder for construction of residential unit is a service of 'construction of residential complex' to the customer and hence service tax would be applicable to it. A contrary view has been expressed arguing that where a buyer makes construction linked payment after entering into agreement to sell, the nature of transaction is not a service but that of a sale. Where a buyer enters into an agreement to get a fully constructed residential unit, the transaction of sale is completed only after complete construction of the residential unit. Till the completion of the construction activity, the property belongs to the builder or promoter and any service provided by him towards construction is in the nature of self service. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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