Aruna Constructions Vs Commissioner of Central Excise And Service Tax (CESTAT Hyderabad)
M/s Aruna Constructions, Visakhapatnam, challenged the Order-in-Original dated 30.01.2013 confirming Service Tax demand along with interest and equal penalty. The dispute concerned construction of residential complexes and the Department’s classification of the activity under “Works Contract Service” for the period 2007-08 to December 2011. The appellant had deposited Rs. 2,00,000/- during investigation and sought the benefit of the composition scheme, which the Department denied on the ground that the option had not been exercised before payment of Service Tax.
The appellant submitted that, prior to insertion of the explanation to Section 65(105)(zzzh) with effect from 01.07.2010, construction of residential complexes undertaken for personal use was not taxable, relying upon CBEC Circular No.108/2/2009-ST dated 29.01.2009 and various Tribunal decisions. It was also submitted that the demand had been computed on gross value without allowing deduction for the material portion or the benefit of the composition scheme and that there was no suppression of facts since the transactions were duly recorded. The Department submitted that the appellant had failed to exercise the option for the composition scheme within the prescribed time and reiterated the findings of the impugned order.
The Tribunal identified three issues: taxability of construction of residential complexes prior to 01.07.2010; entitlement to the composition scheme or deductions; and sustainability of the extended period and penalties. It held that the demand for the period prior to 01.07.2010 would not sustain. For the period beyond 01.07.2010, the Tribunal noted that the retrospective amendment to Rule 2A required the amount payable to be recalculated and that the amendment had not been taken into account in computing the liability. The matter was therefore remanded for re-computation, including adjustment of any amount already paid towards the relevant demand.
