Skyline Foundation & Structures Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Bangalore)
The appeal before CESTAT Bangalore arose from a demand of service tax, denial of CENVAT credit, and imposition of penalties for the period October 2006 to September 2009. The appellant, engaged in construction of residential complexes with more than 12 dwelling units, challenged the order of the Commissioner confirming service tax under multiple categories, including Construction of Residential Complex Service, Sponsorship Service, and Business Auxiliary Service (BAS) under the Reverse Charge Mechanism (RCM).
On the issue of service tax liability under Construction of Residential Complex Service, the Tribunal noted that the relevant period was prior to 01.07.2010. It observed that, as per the insertion of the Explanation to Section 65(105)(zzzh) effective from 01.07.2010 and relevant Board Circulars dated 29.01.2009 and 10.02.2012, builders were not liable to pay service tax before that date. The Tribunal also referred to judicial precedents supporting this position. Accordingly, it held that the demand of service tax under this category for the disputed period could not be sustained and was liable to be set aside.
Regarding Sponsorship Service, the Tribunal examined payments made by the appellant to a local individual in Dubai for assistance in renewal of licenses and legal compliances related to the appellant’s branch office. It found that these payments were not in the nature of sponsorship but were made for compliance purposes. Therefore, the demand raised under Sponsorship Service was held to be unsustainable and was set aside.
