Greenwood Estates Vs Commissioner of Central Tax (CESTAT Hyderabad)
Summary: The Appellant, Greenwood Estates, was engaged in construction and sale of residential houses/units in the venture named ‘Flower Heights’. After acquiring land and obtaining the requisite permission, the Appellant constructed the units and sold unfinished units to prospective buyers through agreements providing for sale of an undivided portion of land together with the semi-finished flat. The sale consideration included the cost of construction of the unfinished unit and the sale of the undivided portion of land. The sale deed was registered upon payment of appropriate stamp duty, and the VAT liability on the deemed sale of the material component under the State Act was also discharged.
A separate agreement was entered into with the buyer of the unfinished flat/unit for undertaking or completing its construction. Revenue took the view that, while no service tax was leviable on services rendered up to the date of execution of the sale deed since the property remained with the builder and such services were effectively self-services, the construction services rendered after the sale deed under the separate construction agreement involved a service provider-service recipient relationship and were liable to service tax under Section 65(105)(zzzza) of the Finance Act. Revenue also considered the development to qualify as a residential complex under Section 65(91a), referring to common facilities such as a park and common water supply and the approval of the layout by HMDA and the Alluvial municipality.
