Commissioner of Central Tax Vs Trendesent Builders Pvt Ltd (CESTAT Hyderabad)
CESTAT Hyderabad rejected the Revenue’s appeal and allowed the cross appeal filed by Trendsent Builders Pvt Ltd concerning service tax on construction of residential complexes during 2008-09 to 2010-11. The respondent had paid service tax on its own share under Construction of Complex Services and Works Contract Service but had not paid tax on flats allotted to landowners, treating them as consideration for land. A Show Cause Notice dated 23.10.2012 demanded service tax of Rs. 15,62,320/- under Construction of Complex Services, Rs. 27,77,04,728/- under Works Contract Service and Rs. 20,946/- for transportation of goods by road. The impugned order confirmed Rs. 1,19,71,782/- under Works Contract and GTA services, along with penalties, while dropping a demand of Rs. 26,72,74,320/-.
Revenue challenged the dropping of the latter demand, contending that the services were classifiable as Works Contract Service. The respondent relied on the Tribunal’s decision in M/s R V Nirman Pvt Ltd., which held that construction of residential complexes by builders/developers for their own projects was not subject to service tax before 01.07.2010. CESTAT followed that decision and rejected the Revenue’s appeal to that extent. It also held that the same decision covered the issue concerning flats allotted to landowners and set aside the impugned order on that ground. However, as there was no appeal or cross-objection concerning the Rs. 20,946/- demand for goods transported by road, that demand was upheld. The Revenue appeal was rejected and the respondent’s cross appeal was allowed.
Cases Discussed
- M/s R V Nirman Pvt Ltd. (CESTAT Hyderabad), Final Order No. A/30270/2026 dated 28.04.2026
- M/s Aruna Constructions Vs CCE and ST, Visakhapatnam (CESTAT Hyderabad), [2026 (3) TMI 753 (CESTAT – Hyd)]
- M/s Aditya Construction Company India Pvt Ltd., Vs CCT, Hyderabad (CESTAT Hyderabad), [2025 (1) TMI 1376 (CESTAT – Hyd)]
- Larsen & Toubro , & Another Vs State of Karnataka (Supreme Court), [2014 (34) STR 481 (SC)].
- CCE Vs Krishna Homes Vs CCE, Bhopal (CESTAT Delhi), [2014 (34) STR 881 (Tri-Del)]
FULL TEXT OF THE CESTAT HYDERABAD ORDER
The respondent, Trendsent Builders Pvt Ltd., are engaged in the construction of residential complexes; during the period 2008-09 to 2010-11, the respondents paid service tax on their own share under Construction of Complex Services, under Works Contract Service which came into existence from 01.06.2007, and have not paid any service tax on the land owners share on the ground that the value of the flats allotted to land owners claiming that the same was consideration for land allotted to them. A Show Cause Notice dated 23.10.2012 was issued to the appellant demanding Service Tax of Rs. 15,62,320/- on account of construction of Complex Services and an amount of Rs. 27,77,04,728/- on account of Works Contract Service and an amount of Rs. 20,946/- on account of transportation of goods by road service was issued to the appellant. Vide impugned order dated 28.03.2014, Learned Commissioner (Appeals) has confirmed the demand of Service Tax Rs. 1,19,71,782/- under Works Contract Services and Goods Transport Agency Services while imposing penalty of Rs. 1,19,92,728/-under Section 78 and the penalty of Rs. 5,000/- under Section 77.
2. Revenue is in appeal against the dropping of demand of 26,72,74,320/- that the classification of the service rendered by the respondent is appropriately classifiable under Works Contract service and the Commissioner has erred in holding the same to be Construction of Complex Service.
3. Learned AR Shri Sreenivasa Reddy reiterates the grounds of appeal.
4. Learned Counsel for the respondent Shri MVS Sridhar submits that the issue is no longer res-integra having been decided by this Bench in the case of M/s R V Nirman Pvt Ltd., vide Final Order No. A/30270/2026 dated 28.04.2026 wherein, it was held that there was no levy of service tax on construction of residential complexes undertaken by builders/developers prior to 01.07.2010. He submits that the impugned case is more stronger than the case of M/s R V Nirman Pvt Ltd., in as much as that the Commissioner himself has accepted that no service tax is payble upto 06.2010.
5. Learned Counsel for the respondent also submits that as per the decision of M/s R V Nirman Pvt , flats allotted to land owners are also not taxable as they do not constitute any taxable service being a mere arrangement involving transfer of property.
6. Heard both the parties and perused the records of the case.
7. We find that this Bench in the case of M/s R V Nirman Pvt Ltd., supra, held as follows:
8. The core issue is whether construction of residential complex undertaken prior to 01.07.2010 is taxable.
9. This issue is no longer res-integra. The Tribunals and Higher Courts have consistently held that prior to 01.07.2010, there was no levy of service tax on construction of residential complex by builder/developer in respect of their own projects.
10. Reliance is placed on M/s Aditya Construction Company India Pvt Ltd., Vs CCT, Hyderabad [2025 (1) TMI 1376 (CESTAT – Hyd)] wherein, it was held that no tax liability prior to 01.07.2010 irrespective of classification and also in other cases like Larsen & Toubro , & Another Vs State of Karnataka [2014 (34) STR 481 (SC)], M/s Aruna Constructions Vs CCE and ST, Visakhapatnam [2026 (3) TMI 753 (CESTAT – Hyd)] and CCE Vs Krishna Homes Vs CCE, Bhopal [2014 (34) STR 881 (Tri-Del)]. Further, CBEC Circular No. 108/02/2009-ST dated 29.01.2009 clarified that construction undertaken by builder till execution of sale deed is in the nature of self service and not taxable.
11. Therefore, we hold that no service tax is leviable on construction of residential complexes completed prior to 01.07.2010.
8. We find that to that extent, the appeal of the Revenue is not
9. However, we find that respondent have raised the issue of leviability of service tax on the land owners share, in the cross appeal submitting that there is no service involved in the transaction; the decision of M/s R V Nirman Pvt Ltd., covers this issue also and therefore, the impugned order is liable to be set aside on this ground At this juncture, Learned AR submits that there is neither an appeal nor a cross objections/appeal on the demand confirmed on account of goods transported by road and therefore, there is no appeal in respect of an amount of Rs. 20,946/- and the same needs to be confirmed.
10. In view of the above, the Revenue appeal is rejected and the Cross appeal filed by the respondent is allowed. However, it is held that the demand confirmed on account of goods transported by road service is upheld.
(Pronounced in the open court on 10.07.2026)
