Rjp Infrastructure Pvt Limited Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
CESTAT Ahmedabad held that construction service provided under Jawaharlal Nehru National Urban Renewal Mission (JnNURM) are exempted from the clutches of service tax. Accordingly, demand of service tax set aside.
Facts- The issue involved in the present case is that whether the appellant is liable to pay service tax under the category of Construction of Complex service for the service related to construction of houses under Jawaharlal Nehru National Urban Renewal Mission (JnNURM) and for SafaiKamdar to Ahmedabad Municipal Corporation or otherwise.
Conclusion- Tribunal in the case of M/s. Khurana Engineering Ltd. has held that the quarters/residential complexes were got constructed by the AMC and AUDA for urban poor people for their residential use, the same amounts to “personaluse‟. The confirmation of demand qua these services by the Commissioner is therefore not sustainable.
Held that the construction of Complex under the same scheme has been considered by this Tribunal and viewed that such construction of Complex is not liable to service tax. Therefore, following the above decisions of this Tribunal, in the present case also the impugned order is not sustainable hence the same is set-aside. The appeal is allowed.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the appellant is liable to pay service tax under the category of Construction of Complex service for the service related to construction of houses under Jawaharlal Nehru National Urban Renewal Mission (JnNURM for short) and for SafaiKamdar to Ahmedabad Municipal Corporation or otherwise.
2. Shri Amal Dave, learned Counsel appearing on behalf of the appellant, at the outset submits that this issue is no longer res-integra as in various judgments it has been held that construction of Complex under the identical schemes is not liable for service tax. He placed reliance on the following judgments:-
(a) M/S. Khurana Engineering Limited vs. Commissioner of Service Tax, Ahmedabad – 2022 (12) TMI 1053 – CESTAT Ahmedabad
(b) DH Patel vs. C.C.E. & S.T. -Surat-I – 2023 (4) TMI 920 CESTAT Ahmedabad
(c) M/S. Natvar Construction Co. vs. Commissioner of Central Excise & ST, Surat – 2023 (4) TMI 438 CESTAT Ahmedabad
3. Shri Tara Prakash, Deputy Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the record. We find that in the present appeal the fact is not under dispute that the construction of Complex is made for JnNURM scheme and construction of houses for SafaiKamdar for the Ahmedabad Municipal Corporation. In these facts, the houses are made under a particular scheme for the poor people for residential purpose and not for other commercial ac activity. The construction activity under the same JnNURM scheme, this Tribunal on same issue passed various judgments as under:-
(a) Khurana Engineering Limited (supra) the Tribunal passed the following order:-
“9. We have heard both sides and perused the appeal records. We are of the considered opinion that the matter requires to be examined in the light of the Section 65(91a) of the Finance Act, 1994 and the explanation thereof which reads as under :
“Residential Complex” has been defined under section 65(91a) of the Finance Act as follows :-
“(91a) “residential complex” means any complex comprising of –
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and
(iii) any one or more of facilities or services such as park, lift, parking spaces community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personaluse as residence by such person.
Explanation : For the removal of doubts, it is hereby declared that for the purposes of this clause. –
(a) “personaluse” includes permitting the complex for use as residence’ by another person on rent or without consideration;
(b) “residential unit” means a single house or a single apartment intended, for use as a place of residence;”
The perusal of the above definition makes it dear that the complex which is constructed with an intention for personaluse as residence by a person who is directly engaging any other person for designing/planning of layout and the construction of such complexes out of the ambit of such construction and thus from taxability. We draw the support from the case of C.C.E., Aurangabad v. Mall Enterprises – 2016 (41) S.T.R. 119 (Tri.-Mum.) wherein it was held that not only residential complex is designed or laid out by another person are excluded from the definition but also the ones intended for personaluse of such person i.e. the owner of the complex. In another case titled as Nithesh Estates Limited v. C.C.E., Bangalore,2015 (40) S.T.R. 815 wherein it was held that the construction of residential complex for ITC (in that case) intended to provide accommodation built for own employees, activity was covered by definition of personaluse in Explanation to Section 65(91A) of Finance Act, 1994. Hence, the assessee‟s activity falls under exclusion of that Section and as such is excluded from levy of Service Tax.
10. In the present case, the quarters/residential complexes were got constructed by the AMC and AUDA for urban poor people for their residential use, the same amounts to “personaluse‟. The confirmation of demand qua these services by the Commissioner is therefore not sustainable.
11. We also find that on the identical facts and issue in the matter of Santosh Katiyar Vs. Commissioner of Central Excise, Bhopal – 2017(3)GSTL 203 the Delhi Tribunal held that :-
“4. From the record, it appears that during the period under consideration, the appellant neither took credit nor paid any Service Tax on the impugned services. The department is of the view that the said services are subject to service tax as per Chapter 5 of the Finance Act, 1994. But the fact remains that Section 65(91)(a) of the Finance Act provides the meaning of complex where the building having more than 12 residential units with the common area.
In the explanation for the removal of doubts, it was declared that for the purposes of this clause :
(a) ‘Personal use’ includes permitting the complex for use as residence by another person on rent or without consideration.
(b) ‘residential unit’ means a single house or a single apartment intended for use as a place of residence.
In the instant case, the allottee is paying the nominal rent or without consideration.
5. From the record, it appears that the Notification No. 28/2010-S.T., dated 22nd June, 2010, clarified that the services is provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv A waas Yojana are exempted from the clutches of Service Tax. Further, vide F. No. 137/26/206-CX.-4, dated 5th July, 2006, it was clarified that Service Tax would not be leviable on construction of complexes under question if their lay out does not require approval by an authority under any law for the time being in force. From the letter dated 30-1-2004 issued by the M.P. Urban Development Department, it appears that the said construction was made under “Rajiv Gandhi bastiVikaskaryakram” which was the Central sponsored scheme and the same is exempted from service tax as per Circular No. 125/2010-S.T., dated 30th July, 2010.
5. In the light of above discussion and by considering the facts and circumstances of the case, we are of the view that the M.P Government has constructed the accommodation for the gandibasti people under the Central sponsored scheme which is attempted to clean India as per Prime Minister’s mission.
6. When it is so, then we find no merits in the impugned order as no service tax is leviable in the instant case. Hence, the impugned order is set aside. The appellant will get the relief accordingly.
From the above judgment it can be seen that the identical fact is involved in the above judgment and in the case in hand in as much as in both the cases the construction service was provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv AwaasYojana. On this common fact in the above judgment it was held that the service tax is not leviable to such project. Hence, the ratio of the above judgment is directly applicable in the present case.
12. As per our above discussion and finding which gets support of above cited judgments, the impugned order is clearly not sustainable, hence the same is set aside. The appeal is allowed with consequential relief, if any arise, in accordance with law.”
(b) In the case of DH Patel (supra) the Tribunal passed the following order:-
“4. We have carefully considered the submissions made by both the sides and perused the record. We find that lower authorities have contended that Gujarat State Police Housing Corporation Limited is not a Government of Gujarat organization whereas the same is an independent Company registered under the Company’s Act therefore, service provided to Gujarat State Police Housing Corporation is liable to service tax. We find that the Gujarat State Police Housing Corporation Limited is 100% owned by Government of Gujarat under the Ministry of Home Affairs therefore the same was held to be a government organization in various judgments. This very issue pertains to Gujarat State Police Housing Corporation Limited has been considered by this Tribunal in following judgments:-
(a) In the case of Sh. DH Patel and Sh. RN Dobariya vs. CCE, Surat (supra), this Tribunal passed the following order:-
“ …. ……. 3. The above said amounts are confirmed against the appellant on the ground that they have not discharged the service tax liability for the work undertaken by them for Gujarat State Police Housing Corporation Ltd. (GSPHCL) during the period 2007-2008 to 2011-2012. Adjudicating authority has confirmed the dues on the ground that GSPHCL is Government of Gujarats public purpose vehicle or Company, hence ineligible to avail any exemption granted for any work which is done for or on behalf of Government.
5., 6. …. …..
7. On perusal of the records, we find that the adjudicating authority has confirmed the demands on the appellants on the ground that they are providing services of Commercial or Industrial construction services which are covered under section 65(30 a) of the Finance Act, 1994 as amended and subsequently amended as per section 65. We find that there is no dispute as to the fact that buildings constructed by the appellant herein are allotted to the police personnel and the personnel working in jail department of the Government of Gujarat, the only point which requires to be considered in this case is whether the appellant herein has rendered services to a personnel who has not occupied the said dwellings. We find that an identical issue in respect of Tamilnadu Police Housing Corporation Ltd. case came up before the Tribunal in the matter of S. Kadirvel (supra). In that stay order, the bench held as under :-
4. After considering the submissions, we have found prima facie case for the appellant inasmuch as it is not in dispute that the houses constructed by the Tamil Nadu Police Housing Corporation Ltd., are owned by the State Government and were allotted to police personnel by the Government. The Police Housing Corporation appears to have worked as an extended arm of the Government. Some of the decisions cited by the learned counsel are apparently supportive of his point that the houses that were constructed should be constructed to be in the personal use of the State Government in this view of the matter, we grant waiver and stay against the impugned demand and connected penalties.
It can be seen that the issue involved in the case in S Kadirvel vs. CCE. Tiruchirapalli as was before the South Zonal Bench, Chennai is the same, hence, respectively following view already taken by the bench, we hold that the appellant has made out a case for the complete waiver of the pre-deposit of the amounts involved. Application for the waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeals.”
(b) Similarly in the case of Shri S. Kadirvel vs. CCE & ST, Trichy (supra) which was relied upon in above decision, the Chennai Bench passed the following order:-
“5.1 The period involved is from 16.06.2005 to 31.08.2007. As rightly argued by the Ld. Counsel for the appellants, demand for the period prior to 11.06.2007 cannot sustain on application of the decision laid down by the Hon’ble Apex Court in the case of Larson & Toubro Ltd. (supra) and requires to be set aside, which we hereby do. 5.2 A small portion of the demand value is after 01.06.2007. TNPHCL engaged the appellant for construction of Police Quarters and the ownership of the houses constructed vested with the Govt. of Tamilnadu which is nothing but an extended arm of the Govt. Section 65 (91) (a) of the Finance Act, 1994 defines residential complex. The said definition excludes personal use. The Tribunal in a similar set of facts had considered the issue and set aside the demand vide Final Order in SIMA Engineering & Constructions (supra). The relevant portion is noticed as under:- “7. Undisputedly, the appellants have entered into an agreement with TNPHCL for providing services in relation to construction of residential complex. However, these are meant for use of police personnel. The said issue was considered by the Tribunal in the case of Nithesh Estates (supra), wherein the Tribunal has observed as under:-
“7.1 In this case there is no dispute and it clearly emerges that the residential complex was built for M/s. ITC Ltd. and appellant was the main contractor. Appellant had appointed sub-contractors all of whom have paid the tax as required under the law. The question that arises is whether the appellant is liable to pay service tax in respect of the complex built for ITC. From the definition it is quite clear that if the complex is constructed by a person directly engaging any other person for design or planning or layout and such complex is intended for personal use as per the definition, service tax is not attracted. Personal use has been defined as permitting the complex for use as residence by another person on rent or without consideration. In this case what emerges is that ITC intended to provide the accommodation built to their own employees. Therefore it is covered by the definition of ‘personal use’ in the explanation. The next question that arises is whether it gets excluded under the circumstances. The circular issued by C.B.E.&C. on 24-5-2010 relied upon by the learned counsel is relevant. Para 3 of this circular which is relevant is reproduced below :
“3. As per the information provided in your letter and during discussions, the Ministry of Urban Development (GOI) has directly engaged the NBCC for constructing residential complex for Central Government officers. Further, the residential complexes so built are intended for the personal use of the GOI which includes promoting the use of complex as residence by other persons (i.e. the Government officers or the Ministers). As such the GOI is the service receiver and NBCC is providing services directly to the GOI for its personal use. Therefore, as for the instant arrangement between Ministry of Urban Development and NBCC is concerned, the Service Tax is not leviable. It may, however, be pointed out that if the NBCC, being a party to a direct contract with GOI, engages a sub-contractor for carrying out the whole or part of the construction, then the sub-contractor would be liable to pay Service Tax as in that case, NBCC would be the service receiver and the construction would not be for their personal use.”
It can be seen that if the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. It is quite clear that C.B.E.&C. also has clarified that in cases like this, service tax need not be paid by the builder/developer who has constructed the complex. If the builder/developer constructs the complex himself, there would be no liability of service tax at all. Further in this case it was different totally, the appellant, has engaged subcontractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax”
The above definition specifically excludes construction undertaken for personal use and such personal use includes permitting the complex for use as residence by another person. We find that the above exclusion clause covers the construction activity undertaken by the assessee. Following the said decision, we are of the view that the demand after 01.06.2007 also cannot sustain and requires to be set aside, which we hereby do.
6. In the result, the impugned order is set aside. The appeal is allowed with consequential reliefs, if any.”
5. In view of the above decisions, which are directly related to the same service recipient, we are of the considered view that the issue is no longer res-integra. The other judgments cited by the learned Counsel also support their case. Accordingly, the assessee’s Appeal No. ST/10464/2015-DB is allowed and Revenue’s Appeal No. ST/11498/2016 is dismissed.”
05. This issue is no longer res integra in the light of the judgments relied upon by the appellant accordingly, the impugned order is set aside. Appeal is allowed.”
(c) InthecaseofM/s. Natvar Construction Co. (supra) the Tribunal passed the following order:-
“4. On careful consideration of the submissions made by both the sides and perusal of record, we find that in the present case the demand was raised on the following:-
(a) Construction of residential complex for GSPHCL,
(b) Construction of residential complex service provided to Surat Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission (JnNRUM)
We find that the issue of levy of service tax on the construction service in respect of above categories have been categorically held as non taxable. Relevant judgments are reproduced below.
(a) In the case of Jethanand Arjundas & Sons (supra), the Tribunal held as under:
“7. After hearing both sides, we find that the activity of constructing houses for slum people under the government schemes is not taxable under Construction of Complex Services/ Works Contract/ CICS as it is intended for personal use. The issue is no longer res integra as squarely covered by Tribunal decision in the case of CCE & ST vs Ganesh Yadav (Supra). As regards services to SEZ we find that this issue is also covered by the decision of the Tribunal in the case of Reliance Port and Terminals Ltd. Vs CCE & ST (Supra). Regarding construction of stadium we find that identical issue has been decided by the Tribunal in favor of the assessee in the case of B. G. Shirke Construction Technology Put Ltd. Vs CCE (Supra). The construction of Vishwavidyalay for M. P. LaghuUdyog is also for public welfare and not for commercial purpose, hence not taxable in terms of Circular No.80/2004 dt 17.09.2004. In view of above, we set aside the impugned order and allow the appeal in favor of the appellant with consequential relief.”
(b) In the case of M/s. Khurana Engineering Limited (supra) this Tribunal passed the following order:
“9. We have heard both sides and perused the appeal records. We are of the considered opinion that the matter requires to be examined in the light of the Section 65(91a) of the Finance Act, 1994 and the explanation thereof which reads as under :
“Residential Complex” has been defined under section 65(91a) of the Finance Act as follows :-
“(91a) “residential complex” means any complex comprising of –
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and
(iii) any one or more of facilities or services such as park, lift, parking spaces community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personaluse as residence by such person.
Explanation : For the removal of doubts, it is hereby declared that for the purposes of this clause. –
(a) “personaluse” includes permitting the complex for use as residence’ by another person on rent or without consideration;
(b) “residential unit” means a single house or a single apartment intended, for use as a place of residence;”
The perusal of the above definition makes it dear that the complex which is constructed with an intention for personal use as residence by a person who is directly engaging any other person for designing/planning of layout and the construction of such complexes out of the ambit of such construction and thus from taxability. We draw the support from the case of C.C.E., Aurangabad v. Mall Enterprises – 2016 (41) S.T.R. 119 (Tri.-Mum.) wherein it was held that not only residential complex is designed or laid out by another person are excluded from the definition but also the ones intended for personal use of such person i.e. the owner of the complex. In another case titled as Nithesh Estates Limited v. C.C.E., Bangalore,2015 (40) S.T.R. 815 wherein it was held that the construction of residential complex for ITC (in that case) intended to provide accommodation built for own employees, activity was covered by definition of personal use in Explanation to Section 65(91A) of Finance Act, 1994. Hence, the assessee’s activity falls under exclusion of that Section and as such is excluded from levy of Service Tax.
10. In the present case, the quarters/residential complexes were got constructed by the AMC and AUDA for urban poor people for their residential use, the same amounts to “personal use’. The confirmation of demand qua these services by the Commissioner is therefore not sustainable.
11. We also find that on the identical facts and issue in the matter of Santosh Katiyar Vs. Commissioner of Central Excise, Bhopal – 2017(3)GSTL 203 the Delhi Tribunal held that :-
“4. From the record, it appears that during the period under consideration, the appellant neither took credit nor paid any Service Tax on the impugned services. The department is of the view that the said services are subject to service tax as per Chapter 5 of the Finance Act, 1994. But the fact remains that Section 65(91)(a) of the Finance Act provides the meaning of complex where the building having more than 12 residential units with the common area.
In the explanation for the removal of doubts, it was declared that for the purposes of this clause :
(a) ‘Personal use’ includes permitting the complex for use as residence by another person on rent or without consideration.
(b) ‘residential unit’ means a single house or a single apartment intended for use as a place of residence.
In the instant case, the allottee is paying the nominal rent or without consideration.
5. From the record, it appears that the Notification No. 28/2010-S.T., dated 22nd June, 2010, clarified that the services is provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv AwaasYojana are exempted from the clutches of Service Tax. Further, vide F. No. 137/26/206-CX.-4, dated 5th July, 2006, it was clarified that Service Tax would not be leviable on construction of complexes under question if their lay out does not require approval by an authority under any law for the time being in force. From the letter dated 30-1-2004 issued by the M.P. Urban Development Department, it appears that the said construction was made under “Rajiv Gandhi bastiVikaskaryakram” which was the Central sponsored scheme and the same is exempted from service tax as per Circular No. 125/2010-S.T., dated 30th July, 2010.
5. In the light of above discussion and by considering the facts and circumstances of the case, we are of the view that the M.P Government has constructed the accommodation for the gandibasti people under the Central sponsored scheme which is attempted to clean India as per Prime Minister’s mission.
6. When it is so, then we find no merits in the impugned order as no service tax is leviable in the instant case. Hence, the impugned order is set aside. The appellant will get the relief accordingly.
From the above judgment it can be seen that the identical fact is involved in the above judgment and in the case in hand in as much as in both the cases the construction service was provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv AwaasYojana. On this common fact in the above judgment it was held that the service tax is not leviable to such project. Hence, the ratio of the above judgment is directly applicable in the present case.
12. As per our above discussion and finding which gets support of above cited judgments, the impugned order is clearly not sustainable, hence the same is set aside. The appeal is allowed with consequential relief, if any arise, in accordance with law.”
5. As regards the service provided by the appellant to GSPHCL, the issue has been considered in the following judgments.
(a) In the case of M/s. Sima Engineering Constructions, S. Rajangam, T.M. Saravanan, M/s. Marimuthu Gounder& Sons (supra), the Tribunal held as under:-
“6. The issue is whether construction of quarters for police personnel would fall within the taxable service of construction of complex service under section 65(30a) r/w section 65(105)(zzzh) of Finance Act, 1994. The details of the period involved in these appeal is furnished by appellant as given in the table below:
