9911796707
TMI Blog2025 (3) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... mpting such transactions from service tax.
There are no merit in the appeal filed by the Revenue - Revenue's appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the complex. For the purpose of levy of service tax on the taxable service in the instant case, what is relevant is the construction of the building. With reference to the "building", the respondent has executed a construction agreement consisting of various clauses and subsequent to the agreement to sell in respect of the proportionate land property, separate agreement was executed after completion of building; the consideration for the construction was received on various dates during the progress of construction, as per the construction agreement. It is his contention that after having executed the agreement to sell the undivided share of the property for the purpose of getting them a flat constructed by the respondent and having received consideration for such land and for the portion of the building constructed on various stages of construction, it cannot be said that the respondent/builder retains full interest in the property and it is constructed for himself so that no service is rendered by one person to another and it is a 'self-service'. If the construction service was carried out by the builder himself, a sale agreement for the building would have been sufficient and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand notice was issued on 21.04.2014 demanding service tax from 01.01.2009 to 30.06.2010 whereas on the issue of non-payment of service tax under WCS, the Department has initiated proceedings by way of show-cause notice dated 16.10.2008 for the very same project; hence, the present show-cause notice issued in the year 2014 for the subsequent period is barred by limitation. In support, they have referred to the judgment of the Hon'ble Supreme Court in the case of Nizam Sugar Factory Vs. CCE [2006(197) ELT 465 (SC)]. 5. Heard both sides and perused the records. 6. The Revenue has come in appeal against the order of the learned adjudicating authority on the ground that the respondent rendered WCS but not paid the tax, the learned Commissioner has wrongly dropped the demand against the respondent considering that the services rendered by the respondent are in the nature of construction of residential complex service and not leviable to service tax prior to 01.07.2010. 7. Assailing the impugned order, the Revenue in their grounds of appeal averred that the respondent discharging the service tax under the WCS prior to March 2009 but discontinued to pay service tax for the period Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service provided or to be provided to any person, by any other person, in relation to construction of a complex". The 'Construction of Complex' includes construction of a 'new residential complex'. For this purpose, 'residential complex' means any complex of a building or buildings, having more than twelve residential 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instructions, the same may be brought to the notice of the undersigned. Also, in the subsequent Circular No.151/2/2012-ST dated 10.02.2012, the Board has clarified as follows:- 2.1 Tripartite Business Model (Parties in the model : (i) landowner; (ii) builder or developer; and (iii) contractor who undertakes construction) : Issue involved is regarding the liability to pay service tax on flats/houses agreed to be given by builder/developer to the land owner towards the land /development rights and to other buyers. Clarification : Here two important transactions are identifiable : (a) sale of land by the landowner which is not 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable being in the nature of self service.
(iv) Further, whenever the service is rendered for completion or construction of a flat for personal use of the service recipient, no Service Tax is payable in view of the exclusion in the definition of residential complex service.
(v) After 1-7-2010, Service Tax is chargeable under the head of 'construction of complex services' if it is service simpliciter and under 'works contract service' if it is a composite works contract.
(o) In view of the above, it is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no Service Tax can be levied on construction of residential complex prior to 1-7-2010. Learned Counsel would submit that for the period post 1-7-2010, they have been discharging Service Tax appropriately. This is a fact which can be verified to ascertain the full tax liability for the period post 1-7-2010 or otherwise.
9. In view of the above, we do not find merit in the appeal filed by the Revenue. Consequently, the impugned order is upheld and Revenue's appeal is dismissed.
( Order pronounced in Open Court on 28. 02. 2025 ) X X X X Extracts X X X X X X X X Extracts X X X X
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