Case Law Details

Case Name : A.S. Sikarwar Vs Commissioner of Central Excise, Indore (CESTAT Delhi)
Appeal Number : Final Order No. ST/A/375/2012-CUS
Date of Judgement/Order : 20/04/2012
Related Assessment Year :
Courts : All CESTAT (775) CESTAT Delhi (273)


A.S. Sikarwar


Commissioner of Central Excise, Indore


APPEAL NO. ST/871 OF 2011

APRIL 20, 2012


Mathew John, Technical Member

In this case, the Appellants have undertaken construction work of 15 residential houses under a contract with M.P. Housing Board. The Revenue was of the view that the Appellants should have paid service tax on the activity under the entry 65(105)(zzzh) for taxing ‘construction of complex’ as defined under section 65(91a) of Finance Act, 1994. The submission of the appellant is that the entry covers only such building where each of the building has got more than 12 residential units. They have built 15 independent houses and not a complex and hence their activity was not taxable under the entry 65(105)(zzzh) which adopts definition in section 65(91a). He relied upon the decision of the Tribunal in the case of Macro Marvel Projects Ltd. v. CST [2008] 17 STT 479 (Chennai – CESTAT)

2. The Authorised Representative appearing for the Revenue submits that the explanation under section 65(91a) of Finance Act, 1994 gives definition of “residential unit” to mean “a house or single apartment intended for use as a place of residence”. Even if the residential units are separate, it will be covered by the definition, according to him.

3. The A.R. further submits that the decision in the case of Macro Marvel Projects Ltd. (supra) was with reference to the entry for works contract under sections 65(105)(zzzza) of Finance Act, 1994 whereas the present case is in respect of construction of residential complex under entry 65(105)(zzzb). He also points out that the Tribunal in para 2 of the order has observed as under :-

“These observations of ours with reference to ‘works contract’ have been occasioned by certain specific grounds of this appeal and the same are not intended to be a binding precedent for the future.”

4. We have considered arguments on both sides. We find that the definition of residential complex as per section 65(91a) of Finance Act, 1994 is applicable for both the entries under section 65(105)(zzzh) for levy of tax on construction of residential complex as also for entry under section 65(105)(zzzza) for works contract. Therefore, there cannot be an argument that the expression ‘residential complex’ has to be interpreted in one manner for works contract and in a different manner for levy of tax on construction of a residential complex.

5. We further note that Revenue being aggrieved by the decision of the Tribunal in the said matter had filed appeal with the Hon’ble Supreme Court and the Hon’ble Supreme Court has dismissed the appeal filed as reported at 2012 (25) J514 (SC). So we consider that this matter is no longer res integra and service tax can be demanded under section 65(105)(zzzh) only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where in one compound has many buildings, each having not more than 12 residential units. Therefore, we set aside the impugned order and allow the appeal.


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0 responses to “Service tax can be demanded only if residential complex comprises more than 12 residential units”

  1. AJAY S SHAH says:


  2. leo says:

    Kindly advise:

    I have purchased (Sept 2011) an individual villa in a gated community (which has 12 such villas & 1 block with 6 flats). The land of my villa has been registered separately and construction agreement has been done with this builder.

    As per this above ruling information, individual villa within a compound is not consider for ST payment, is my understanding correct. Then I don’t have to pay ST to builder.

    This gated community consists of 3 types of villa models, so the plan sent for CMDA approval consists of 4 villa’s per plan type, with Gym, park & common STP n sump.

    In this case do I need to pay Service tax? Since as per plan it is only 4 villas, still do I have to pay the service tax.

    If yes, how much of the construction cost (which is Rs.1 Cr)?

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