Custom, Excise & Service Tax Tribunal
M/S Vinayaka Homes vs Commissioner Of Central Excise And ... on 12 January, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/1720/2012-DB [Arising out of Order-in-Appeal No. 69/2012 dated 30/03/2012 passed by Commissioner (Appeals), Cochin] ] For approval and signature: HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s VINAYAKA HOMES PISHARI KOVIL ROAD, EROOR WEST.P.O, TRIPUNITHURA, KERALA-682306. Appellant(s) Versus Commissioner of Central Excise and Service Tax, COCHIN C. .R BUILDING, I S PRESS ROAD, ERNAKULAM, COCHIN 682018. Respondent(s)
Appearance:
Mr. V. Unnikrishnan, Advocate For the Appellant Mr. Pakshi Rajan, A.R. For the Respondent Date of Hearing: 12/01/2016 Date of Decision: 12/01/2016 CORAM:
HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20047 / 2016 PER ASHOK K. ARYA The matter concerns recovery of service tax on Works Contract Service. The period involved in this case is from January 2009 to March 2009. The appellants namely M/s Vinayaka Homes state that the Department has wrongly confirmed the demand of service tax on works contract service when they were rendering services of Construction of Residential Complex which is under the provisions of Section 65 (105)(zzzh) of the Finance Act, 1994.
2. The appellants plead that during the relevant period there was no service tax on construction of residential complex service rendered by the appellants and consequently, the Revenue cannot levy service tax under the service of works contract service based on the fact that the appellants paid VAT under the category of works contract on the value of materials used for such services.
3. The learned A.R. appearing for the Revenue reiterates the findings given in the Order-in-Appeal and submits that this service is covered under works contract and therefore liable for recovery of service tax for the period from January 2009 to March 2009.
4. The facts on record and the submissions by both the sides have been carefully considered. It is not comprehensible that how the services rendered by the appellants which are under the category of construction of residential complex service as they were constructing residential complex on their own land meant for buyers/clients, was classified under works contract, when there were no elements of services of works contract in the activity being performed by the appellants.
4.1. The appellants were rendering construction of complex service as they were designing, planning, developing and clearing site on their own land for construction activities for buyers/clients and were not doing any execution of works contract and elements of definition of works contract, therefore, are not found present. It is made clear that the activities of the appellants fall under the category of construction of residential complex service and such services for the period of January 2009 to March 2009 were not liable to service tax which is clear by virtue of the paragraph 3 of C.B.E.C. Circular No. 108/2/2009-S.T. dated 29.1.2009; it says that the persons who are providing services of construction of residential complex in the form of designing, planning, developing and so on will not be subject to service tax as such services would fall under the exclusion provided under definition of residential complex. To make the subject matter more clear that the contents of Para 3 of above Circular dated 29.1.2009 are quoted below :
3. The matter has been examined by the Board. Generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of agreement to sell. Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of self-service and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter/builder/developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of residential complex. However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax. 4.2 It is however, made clear that such services become taxable only after 1.7.2010 when the Explanation was added by the Finance Act, 2010 dated 8.5.2010 in definition of construction of complex service to the provisions of Section 65(105)(zzzh) of the Finance Act, 1994.
5. Considering above discussion, the impugned order is set aside and the appeal allowed with consequential relief, if any.
(Pronounced in open court) (ASHOK K. ARYA) TECHNICAL MEMBER (M.V. RAVINDRAN) JUDICIAL MEMBER /vc/