The Customs, Excise And Service Tax Appellate Tribunal Chennai dismissed the demand for service tax on construction of residential complexes.
Facts
It is the case of the Revenue, as could be gathered from the impugned order, that the assessee had provided services of construction of residential complex without obtaining registration under the said service, had thus failed to pay Service Tax under the said category and that they also had not filed their S.T.-3 returns. A Show Cause Notice was issued, dated 22.10.2010, proposing the demand of Service Tax under the above category, covering the period from 16.06.2005 to 31.03.2009, along with applicable interest and penalty.
Submissions
S. Jayanth, chartered Accountant, contended that the activity of the appellant could not be taxable under construction of complex service in view of the Hon’ble Supreme Court in the case of Commissioner of Central Excise and Customs, Kerala v. M/s. Larsen & Toubro Ltd. wherein only service simpliciter has been mandated for taxability and collection of Service Tax for composite contracts under construction of complex service has been held to be bad for the period prior to 01.06.2007 by the Apex Court.
Decision
The division bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) noted that the sample of the registered sale deed placed on record reveals that what was sold was only a site.
The tribunal said that the joint development agreement required the construction activity to be entrusted to the appellant only, ipso facto does not mean that they were involved in the construction of residential complex as such. It may be one of the conditions prescribed in the deed, but however, if the buyer refused to hand over the construction activities to the appellant, the appellant could not have taken any legal action since, discernibly, such condition is not binding legally on the buyer.
It was found by the bench that Revenue has not disputed the provision of construction service in terms of contract between the parties and the said activity was carried out in a composite manner and hence, there is no possibility to sustain demand up to 01.06.2007 on the above contract.
“For the subsequent period i.e., post 01.06.2007, in view of the very fact that the demand has been worked out after allowing abatement, no Service Tax could be demanded under construction of complex services simpliciter”, the tribunal held.
Case title: M/s. Varma Constructions Private Limited v/s Commissioner of Central Excise
Citation: Service Tax Appeal No. 41584 of 2015
