Case Law Details
Shanti Builders Vs Commissioner of Service Tax (CESTAT Chennai)
CESTAT held that no Service Tax could be levied on construction of residential complexes prior to 01.07.2010 even when the service is rendered either as service simpliciter or as a works contract.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed by the assessee against the Order-in-Original No. 14/2013 dated 21.06.2013 passed by the Commissioner of Central Excise, Chennai and the period of dispute is from 16.06.2005 to March 2010.
2. It appears that the Revenue had entertained a doubt that the appellant, who was a builder, had undertaken construction of various residential projects, namely:
(a) Project Shanthi Haven;
(b) Project Shanthi Gulmohar;
(c) Residential Complex at Tiruvindathai Village; and
(d) Project Shanthi Samudra, thereby, they had rendered construction of complex services (‘CCS’ for short) and therefore, they were liable to pay Service Tax, and, consequently, issued a Show Cause Noticed dated 12.04.2011, proposing to demand Service Tax under CCS from 16.06.2005. In the Show Cause Notice, the Commissioner had acknowledged the payment of Rs.40,00,000/- paid by the assessee and hence, inter alia proposed appropriation of the same against the proposed demand.
3. It appears that the appellant filed a reply denying the Service Tax liability on the ground that what they undertook was in the nature of ‘works contract’ service; but however, in the adjudication, the Commissioner vide impugned Order-in-Original, has confirmed the proposals made in the Show Cause Notice and it is against this order that the present appeal has been filed before this forum.
4. Heard Shri N. Viswanathan, Learned Advocate for the appellant and Shri R. Rajaraman, Learned Assistant Commissioner for the Revenue.
5.1 The Learned Advocate for the appellant would submit that the issue of taxability either under CCS or WCS has been laid to rest by a catena of orders of various Benches of the CESTAT, wherein the decision of the Hon’ble Apex Court in the case of Commissioner of Central Excise & Customs, Kerala v. M/s. Larsen & Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)] has been followed, to hold that Service Tax would be chargeable only after 01.07.2010 under the head CCS if service simpliciter is involved and under the head WCS if it is a composite works contract.
5.2 For convenience, the Learned Advocate for the appellant has referred to the findings of the co-ordinate Hyderabad Bench of the CESTAT in the case of Commissioner of Customs, Central Excise and Service Tax, Visakhapatnam-I v. M/s. Pragati Edifice Pvt. Ltd. [2019 (31) G.S.T.L. 241 (Tri. – Hyderabad)], wherein it has been held as under:-
“(n) To sum up, as far as construction of ‘residential complexes’ by the builders are concerned :
(i) Prior to 1-6-2007, if it is a composite works contract, no Service Tax is leviable in view of the judgment of the Hon’ble Apex Court in the case of Larsen & Toubro (supra).
(ii) After 1-6-2007, it is chargeable as ‘works contract’ only if it is a composite contract and under ‘construction of complex services’ if it is a service simpliciter.
(iii) However, after 1-6-2007 but prior to 1-72010, whether it is a service simpliciter or a works contract, if the service is rendered prior to issue of completion certificate and transfer to the customer, it is not taxable being in the nature of self service.
(iv) Further, whenever the service is rendered for completion or construction of a flat for personal use of the service recipient, no Service Tax is payable in view of the exclusion in the definition of residential complex service.
(v) After 1-7-2010, Service Tax is chargeable under the head of ‘construction of complex services’ if it is service simpliciter and under ‘works contract service’ if it is a composite works contract.
(o) In view of the above, it is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no Service Tax can be levied on construction of residential complex prior to 1-7-2010. Learned Counsel would submit that for the period post 1-7-2010, they have been discharging Service Tax appropriately. This is a fact which can be verified to ascertain the full tax liability for the period post 1-7-2010 or otherwise.”
(Emphasis supplied by us, in bold, for clarity)
6. Per contra, the Learned Assistant Commissioner for the Revenue would rely on the findings of the lower authority.
7. Having heard the rival contentions, we find that the only issue to be decided is: whether the authority below is justified in demanding Service Tax from the appellant under construction of complex service for the period from 16.06.2005 to March 2010?
8. We have gone through the orders of the various CESTAT Benches which have been considered by the Hyderabad Bench of the CESTAT in M/s. Pragati Edifice Pvt. Ltd. (supra), the relevant observation of which has been extracted hereinabove. We find that it has been categorically held that no Service Tax could be levied on construction of residential complexes prior to 01.07.2010 even when the service is rendered either as service simpliciter or as a works contract. Admittedly, the period of dispute, as noted by us in the first paragraph, is from 16.06.2005 to March 2010 and hence, the above ruling is squarely applicable to the present case.
9. In view of the above and also in view of the fact that no distinguishing / contrary order is placed on record, we are of the view that the demand raised in the impugned order cannot sustain, for which reason we set aside the impugned order.
10. In the result, the appeal is allowed with consequential benefits, if any, as per law.
(Order pronounced in the open court on 06.04.2023)
