Case Law Details
K.B. & Co. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai allowed the appeal concerning the levy of service tax under the category of ‘Construction of Complex Service’ for the period 01.04.2008 to 31.03.2010. The appellant had executed civil construction works for the Tsunami District Implementation Unit (TDIU) under the Rajiv Gandhi Rehabilitation Programme, involving the construction of 246 individual houses for Tsunami-affected people. The Tribunal observed that the Revenue had not disputed that the appellant constructed individual residential houses and not a residential complex. Relying on its earlier decision in Macro Marvel Projects Limited, the Tribunal held that construction of individual residential units does not fall within the definition of ‘Construction of Complex Service’ under Section 65(30a) of the Finance Act, 1994. Accordingly, the service tax demand was set aside, and the appeal was allowed with consequential benefits as per law.
CESTAT Chennai held that the construction of individual houses for Tsunami-affected people under the Rajiv Gandhi Rehabilitation Programme was not liable to service tax under ‘Construction of Complex Service’. The Tribunal noted that the appellant had constructed independent residential units, a fact not disputed by the Revenue, and relied on the decision in Macro Marvel Projects Limited, which held that construction of individual residential houses is outside the scope of taxable construction of residential complexes. Consequently, the Tribunal set aside the service tax demand and allowed the appeal with consequential benefits.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The period of dispute is 01.04.2008 to 31.03.2010. The undisputed fact is that the appellant is engaged in construction of complex services and during the year under dispute they had executed civil construction works for Tsunami District Implementation Unit (TDIU for short), which required the appellant to construct individual houses to the Tsunami affected people. It is the case of the appellant that it was awarded the work order by the Chairman, TDIU for construction of about 246 houses for Tsunami affected people under Rajiv Gandhi Rehabilitation Programme at various places in Tamil Nadu. Terms of the Agreement, as canvassed before us, was that the contract was for reconstruction of houses which were vulnerable due to the effect of Tsunami and nowhere was it stipulated that the said contract was for construction of residential complex and hence, the scope of service rendered by the Appellant would not be covered under the definition of ‘Construction of Complex Service’ under Section 65(30a) of the Finance Act, 1994. The Appellant is claimed to have constructed more than 12 independent houses and not complex, hence activity would not be taxable under Section 65(105)(zzh) ibid.
2. Heard Sri S. Murugappan, ld. Advocate for the Appellant and Ms. Anandalakshmi Ganeshram, ld. Asst. Commissioner for the Respondent.
3. Upon hearing both sides, we find that the only issue that survives for our consideration is, “whether the demand of service tax under ‘Construction of Complex Service’ on the Appellant is sustainable in law”?
4. Para 10 the impugned order refers to statement of the Proprietor recorded by the Revenue and from that it is clear that the appellant had constructed individual houses numbering more than 12 houses, which fact has not at all been disputed by the Revenue. The facts therefore are clear inasmuch as the Appellant undertook the construction of individual residential units, which activity was not included within the scope of ‘Construction of Complex Service’ as defined under Section 65(30a) ibid. We find in this regard, reliance placed on the order of Chennai Bench of the Tribunal in the case of Macro Marvel Projects Limited Vs CST Chennai – 2008 (12) STR 603 (Tri.-Chennai) is apt wherein, the Bench took the view at para 2 as under :
”It is abundantly clear from the above provisions that construction of residential complex having not more than 12 residential units is not to be taxed under Finance Act, 1994. For the levy, it should be a residential complex comprising more than 12 residential units. Admittedly, in the present case, the appellant had constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the lawmakers did not want construction of individual residential units to be subject to levy of service tax….”.
5. The above ratio squarely applies to the facts of the present case and hence, we are of the view that the demand of service tax in the impugned order cannot sustain for which reason, we set aside the same.
6. In the result, the appeal is allowed with consequential benefits if any, as per law.
(Order pronounced in the open court on 27.01.2025)
Author Bio
