Custom, Excise & Service Tax Tribunal
Lakh Ram Arya vs Jaipur-I on 22 June, 2018
1
S. T. Appeal No. 52796 of 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No.2, R. K. Puram, New Delhi, Court No. II
Date of hearing/decision: 22.06.2018
S. T. Appeal No. 52796 of 2014
(Arising out of Order-in-Appeal No. 28(VC)ST/JPR-I/2014 dated 20.03.2014
passed by the Commissioner (Appeals), Central Excise, Jaipur-I).
Lekh Ram Arya Appellant
Vs.
CCE, Jaipur Respondent
Appearance:
Ms. Rinky Arora, Advocate for the appellant Sh. A. K. Singh, AR for the Respondent Coram:
Hon'ble Mr. V. Padmanabhan, Member (Technical) Hon'ble Ms. Rachna Gupta, Member (Judicial) Final Order No. 52353/2018 Per: V. Padmanabhan:
The present appeal is directed against the Order-in-Appeal No. 28(VC)ST/JPR-I/2014 dated 20.03.2014 passed by the Commissioner (Appeals), Central Excise, Jaipur-I.
2. The appellant is engaged in the construction activities and during the period 01.04.2010 to 31.03.2011 they executed two work orders for Rajasthan Housing Board. In one of the orders they constructed ten units of HIG houses as well as in the second one, twelve units of MIG houses. It is claimed that these units were individual houses. The lower authorities took the view that even if they were individual houses, they were part of the residential complex with various common facilities and were part of the colony. Accordingly, the lower authority has held that the construction of the above housing units will 2 S. T. Appeal No. 52796 of 2014 be liable for payment of service tax under the category of 'Construction of Complex Service' defined under Section 65(30a) read with Section 65(91a) of the Finance Act, 1994. The order for payment of Service tax has been challenged mainly on the following grounds:
(i) It is submitted that construction of ten HIG houses as well as twelve MIG houses in different parts of Pratap Nagar Housing Complex for Rajasthan Housing Board cannot be brought within the definition of Construction of Complex Service. It is submitted that each building should have more than twelve residential units and in this case they are individual houses and not falling within the above definition.
(ii) It is also submitted that in an earlier appeal decided by the Delhi Bench of the Tribunal for the same appellant, vide Final order No. 58379/2017 dated 11.12.2017, the Tribunal has held that similar activity cannot be levied to service tax under the definition of Construction of Complex Service.
3. With the above background, we heard Ms. Rinky Arora, ld. Advocate and Sh. A. K. Singh, ld. AR for the Revenue.
4. Ld. Advocate for the appellant reiterated the grounds of appeal and specifically emphasised the decision of the Tribunal in appellant own case.
5. Ld. AR submitted that the construction of ten HIG and twelve MIG houses were part of the housing colony. He submitted a copy of the letter received from the jurisdictional Commissioner to the effect that it is the common knowledge that the State Housing Board colonies have common 3 S. T. Appeal No. 52796 of 2014 approach road, water supply etc. The appellant has not produced any evidence to the contrary.
6. After hearing both sides and on perusal of record, it is seen that the appellant have carried out construction activities for Rajasthan Housing Board. They have carried out the work orders for the construction of ten as well as twelve housing units in different parts of Pratap Nagar colony. A set of ten / twelve houses do not come within the definition of residential complex under Section 65(91a) which is applicable only to a building or buildings having more than twelve residential units, but the Revenue has taken the view that these residential units have been constructed as part and parcel of a massive colony. But, we note that Revenue has not gathered any specific evidence not brought on record the fact whether such facilities are existing in the part of the residential complex where the appellant has carried out the construction.
7. We have also carefully considered the Final Order No. 58379/2017 dated 11.12.2017 in which the Tribunal has occasion to consider a similar dispute in respect of the same appellant for an earlier period. In the said case the appellant constructed twelve houses for Rajasthan Housing Board. The Tribunal held that in the absence of any positive evidence to the effect that these units share common facilities, the Service Tax liability cannot be upheld. The finding of the Tribunal is as under:-
"7. On the first issue, we note that the appellants, admittedly, constructed less than 12 houses in terms of the contract for Rajasthan Housing Board. To establish that these houses are part of a residential complex of having more than 12 houses sharing common facilities like community hall, water supply, etc., it is necessary to have categorical evidences. In the impugned order, we note that certain inferences were made based on common knowledge. Further, onus was put on the appellants to produce the evidences to the contrary. We found such course of action is not sustainable. Since the demand under construction 4 S. T. Appeal No. 52796 of 2014 of complex service is issued to the appellant, it is necessary to establish that their activities are clearly falling under the said tax entry. When the construction of independent houses is below 12 nos., it is necessary to establish that these houses are a part of residential complex, sharing common facilities as mandated in this statutory tax entry. In the present impugned order, no such evidences are adduced, only the inferences have been made. We find construction of individual house for Rajasthan Housing Board has been a subject matter of various appeals before the Tribunal. It has been consistently held that to tax the appellant under "construction of complex service", it is necessary to record that the construction are of residential complex of having 12 or more dwelling units or parts thereof. These complexes, should share common facilities, even if they are independent houses. Such categorical finding is required to satisfy the statutory provisions of Section 65(91a) of the Finance Act, 1994. We find that in the present case, the evidences are lacking. The Tribunal in the case of Hari Narain Khandelwal vide Final Order No.53308/2017 dated 16.05.2017 held as under:-
"5. We have perused the impugned order which held that the individual houses built by the appellant will be liable to be taxed under the above said category. We find that the lower Authorities came to the conclusion on the ground that the appellants built 10 numbers of individual HIG quarters at Takshak Colony, Section 25, Pratap Nagar, Jaipur where total 69 numbers of quarters have been constructed by various contractors. The lower Authorities further recorded that the Takshak Colony had more than 12 houses in these premises and also have common facilities like roads, street lights, sewerage line, park and common water supply etc. and are situated in close proximity in a common area. We find that he reasoning adopted by the lower authorities is devoid of legal merit. The statutory definition of residential complex is very clear, that there should be more than 12 residential units with common area and any one or more facilities or services such as park, lift, parking space, community hall, water supply and affluent treatment system. More importantly, the complexes should be located within a premises and lay out of such premises should have been approved by an authority under any law for the time being in force. It is clear that there should be a premise sharing common facilities and common area as approved by a lay out. In the present case, we find that the lower authorities stated that there were common facilities like roads, street lights, sewerage line, park, common water supply situated in close proximity in a common area. There is no finding to the effect that these common facilities are within the approved lay out by the local Authorities and they are for the houses of such residential complexes within the 5 S. T. Appeal No. 52796 of 2014 location. In other words, various residential units built independently but sharing roads, street lights, sewerage line, park in close proximity do not by themselves come under the taxable category of residential complex. It is apparent that all housing units in any urban colony do share roads, street lights, sewerage lines, water supply, which are provided by the local Authorities. It does not mean that any residential unit built in any colony having such common roads, street lights, water supply or nearby park will be liable to tax under construction of complex service. The common area and common shared facilities should be with reference to the approved lay out of a particular location and the residential units should be located in such approved lay out. Sharing facilities provided by local Authorities available to all residential units by way of road, street lights, park, water supply unit does not make the residential unit covered by the tax entry under Section 65(91a) of the Finance Act, 1994. As such, we find that the impugned order failed to justify the categorization of the construction carried out by the appellant, with reference to 10 independent houses, as construction of residential complex in terms of the above tax entry."
8. By following the earlier decision of the Tribunal, we set aside the impugned order and allow the appeal.
(Dictated and pronounced in the open Court).
(Rachna Gupta) (V. Padmanabhan)
Member (Judicial) Member (Technical)
Pant