Santosh Kumar (Advocate)
Statute– Section 65 (105)(zzzh) of the Finance Act, 1994
Matter in dispute– Service tax on services in relation to construction of complex
Petitioner’s Argument:-
His agreement with the builder is a composite contract for purchase of immovable property and contends that in absence of specific provisions for ascertaining the service component of the said agreement, the levy would be beyond the legislative competence of the Parliament.
Basis of Judgment:
Thus, while the legislative competence of the Parliament to tax the element of service involved cannot be disputed but the levy itself would fail, if it does not provide for a mechanism to ascertain the value of the services component which is the subject of the levy. [Para 37]
Limitation of Judgment:
(1) The Order is most likely to be challenged in the Supreme Court;
(2) the authority of service tax levied under Section 65 (105)(zzzh) of the Finance Act, 1994 has been challenged but the same section have been deleted wef 1st July, 2012.
(3) “Although such composite contracts for development of complex and sale of units therein would fall within the scope of works contract as held by the Supreme Court in Larsen and Toubro v. State of Karnataka (2014) 1 SCC 708,, we do not propose to examine whether services involved in construction of complexes is exigible to service tax as services in relation to execution of a works contract falling within the scope of Section 65(105)(zzzza) of the Act or under Section 65B(44) after the amendments brought about in the Act by virtue of Finance Act, 2012 – the said controversy is outside the scope of the present petitions and it would not be appropriate for us to examine it in these petitions. [Para 30 of the Judgment]
Fact of the case:-
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