Skyline Builders (Trivandrum) Vs Commissioner of Central Excise (CESTAT Bangalore)
The appeal before the CESTAT Bangalore arose from an order confirming service tax demands against the appellant engaged in construction-related services, including “Construction of Complex Service,” “Management, Maintenance or Repair Service,” and “Real Estate Agents Service” for the period from 16.06.2005 to March 2009. The appellant did not dispute tax liability under “Real Estate Agents Service” but challenged demands under the other two categories.
The primary issue concerned whether service tax was payable on construction of residential complexes where agreements were entered into with prospective buyers and payments were received in instalments prior to completion. The appellant contended that the explanation deeming such activity as a taxable service was introduced only with effect from 01.07.2010 and therefore could not be applied retrospectively. Reliance was placed on Board circulars and judicial precedents clarifying that prior to this amendment, such construction activities were treated as self-service and not taxable.
The Tribunal examined the statutory provisions, relevant circulars, and case law, including decisions holding that prior to 01.07.2010, construction undertaken by builders for prospective buyers under agreements to sell did not constitute a taxable service. It was noted that the explanation inserted in 2010 expanded the scope of taxable services and was prospective in nature. Accordingly, the Tribunal held that no service tax was leviable on such activities during the disputed period.
