No demand of service tax could be fastened on construction of complex

Prakash Builders Vs Commissioner, Central Excise, Customs and Service Tax (CESTAT Delhi)

Conclusion: The definition of ‘construction of complex’ and a ‘residential complex’ continued to remain the same after 1 July, 2012 and, therefore, service tax liability could not have been fastened even after 1 July, 2012 under ‘construction of complex’.

Held: Assessee-partnership firm was engaged in civil construction work for some of the Government Departments.  The two show-cause notices were issued wherein the activity was undertaken by assessee was shown to be classifiable and taxable under the category of ‘construction of complex’ under Section 65 (30a) of the Finance Act, 1994 and the liability of assessee for the payment of service tax as a recipient of Goods Transport Agency (GTA). The second show cause notice refered to the work orders issued to the MP Development Board as also the Public Works Department and National Buildings Construction Corporation Ltd. It made reference to GTA. The notice further sought to demand service tax with the penalty and interest. The issue was regarding the classification and taxability of the activity undertaken by assessee under the category of ‘construction of complex’ under Section 65 (30a) of the Finance Act, 1994 and the other issue raised was whether assessee was liable to pay service tax under the Goods Transport Agency (GTA) or not? It was held that the definition of “construction of complex” and a “residential complex” continued to remain the same after 1 July, 2012 and, therefore, service tax liability could not have been fastened even after 1 July, 2012 under “construction of complex”. Thus, the levy of service tax on assessee under ‘construction of complex service’ was not justified. With regard to GTA service, Principal Commissioner had recorded a finding that assessee had not submitted any documentary evidence in support of the contention that transportation of goods was through local cartage and no consignment notes were issued. Though it was a fact that assessee had not produced these receipts in response to the show cause notice but the meager amount paid by assessee for this activity during this period persuaded to remand the matter to the Principal Commissioner for examining this aspect after providing an opportunity to assessee to submit the relevant documents within six weeks from the date of order. Assessee might submit the necessary documents before Principal Commissioner to substantiate that the payment made was for local cartage and not towards GTA Services. Thus, the order to the extent it confirmed the demand of service tax under “construction of complex” services was set aside. However, the matter relating to confirmation of demand of service tax under GTA services was remanded to the Principal Commissioner for a fresh determination in the light of the observations made above.

FULL TEXT OF THE CESTAT JUDGEMENT

This appeal seeks the quashing of the order dated 29 February, 2016 passed by the Principal Commissioner of Customs, Central Excise and Service Tax, Bhopal ¹ by which demand of Rs.26,28,987/- has been confirmed in respect of “construction of complex” services for the period from 1 October, 2007 to 31 March, 2012 and demand of Rs.7,97,641/- has been confirmed for the period 1 April, 2013 to 31 March, 2014. The order further seeks to confirm the demand of Rs.1,12,847/- for ‘goods and transport agency’ ² services for the period 1 October, 2007 to 31 March, 2012 and demand of Rs.1,142/- for the period 1 April, 2013 to 31 March, 2014. Interest and penalty have also been imposed upon the appellant.

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