MVV Builders Vs Commissioner of Central Excise and Service Tax (CESTAT Hyderabad)
Summary: CESTAT Hyderabad partly allowed MVV Builders’ appeal and dismissed the Department’s cross-appeal arising from a service tax demand on construction of residential complexes for 2007-08 to 2011-12. The Tribunal held that residential complex construction undertaken before 01.07.2010 was not taxable because, before insertion of the Explanation to Section 65(105)(zzzh) of the Finance Act, 1994, construction by a builder before sale was treated as self-service; accordingly, the demand for services rendered before 01.07.2010 was set aside. It further held that where MVV Builders sold undivided land and semi-constructed houses and thereafter entered into individual contracts with flat buyers for completion and finishing, such construction for personal use fell outside Section 65(91a), including after 01.07.2010.
On limitation, CESTAT found no ground to invoke the extended period merely because the assessee had classified its services according to its understanding in ST-3 returns; the Range Officer was responsible for scrutinising those returns and determining the correct classification. The demand was therefore confined to the normal period. All penalties were set aside under Section 80. On the Revenue’s appeal, CESTAT followed its precedents holding that the composition scheme could be permitted even where the assessee had not earlier opted for it. The matter was remitted solely for computation of service tax and interest in accordance with these findings, with consequential relief to the assessee.
