Custom, Excise & Service Tax Tribunal
Dehradun vs Shree Vasundhara Infra Promoters Pvt ... on 30 April, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH - COURT NO. 1
Service Tax Appeal No. 50894 Of 2019
[Arising out of Order-in-Appeal No. DDN-EXCUS-000-APP-25-2018-19 dated
25.01.2019passed by the Commissioner (Appeals) of Central Goods and Service Tax, Dehradun] Commissioner of Central Goods and : Revenue Service Tax, Customs and Central Excise, Dehradun Nehru Colony, Dehradun Vs Shree Vasundhara Infra Promotors : Assessee Private Limited D-1 & D-2, Civil Lines, Rudrapur (U. S. Nagar) APPEARANCE:
Shri Harshvardhan, Authorized Representative for the Revenue None for the assessee with Service Tax Appeal No. 51701 Of 2019 [Arising out of Order-in-Appeal No. DDN-EXCUS-000-APP-25-2018-19 dated 25.01.2019 passed by the Commissioner (Appeals) of Central Goods and Service Tax, Dehradun] Shree Vasundhara Infra Promotors : Assessee Private Limited D-1 & D-2, Civil Lines, Rudrapur (U. S. Nagar) Vs Commissioner of Central Goods and : Revenue Service Tax, Customs and Central Excise, Dehradun Nehru Colony, Dehradun APPEARANCE:
None for the assessee Shri Harshvardhan, Authorized Representative for the Revenue CORAM :
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) 2 Service Tax Appeal No. 50894 & 51701 of 2019 FINAL ORDER No. 50552-50553/2025 Date of Hearing:21.01.2025 Date of Decision:30.04.2025 HEMAMBIKA R. PRIYA The present two appeals are cross appeals; filed by the Revenue and filed by Shri Vasundhara Infra Promotors Private Limited1 to assail the same impugned order wherein the Commissioner has set-aside the demand of Rs. 89,28,829/- and upheld the demand of Rs. 21,44,696/- along with interest and penalty. As the case pertains to the year 2019, and no one appeared for the assessee, we proceed to decide the case based on records and the submissions of the learned authorized representative of the Department.
2. The brief facts of the case are that the assessee was engaged in the activity of construction of villas, commercial shops, and development of land in lieu of development charges from the owner of the land, under different projects. The assessee was registered since 2011 for providing construction of residential complex services and construction services other than residential complex including commercial/industrial complex. However, no Service Tax was paid for the period January 2013 to October 2016. During an enquiry by the officers of the department, it was noticed that the assessee had discharged his service tax liability in respect of construction of commercial shops and land development charges received by him from land owners but had failed to deposit his Service Tax liability on 1 The assessee 3 Service Tax Appeal No. 50894 & 51701 of 2019 construction of Villas. Accordingly, a show cause notice dated 17.01.2017 invoking extended period was issued for demanding Service Tax along with interest & proposing imposition of penalties. The adjudicating authority, vide the Order-in-Original No. 18/JC/HPR/2017-18 dated 18.05.2017, confirmed the demand along with interest, and appropriated the amount of tax already deposited towards the confirmed demand. Penalty equal to confirmed demand and penalty for non-filing of ST-3 return were also imposed. The assessee filed an appeal before the Commissioner (Appeals) against Order-in-Original No. 18/JC/HPR/2017-18 dated 18.05.2017. The Commissioner (Appeals) vide the impugned order modified the order- in-original by setting aside the demand of Rs.89,28,829/-pertaining to the construction of the villas. The balance demand of Rs.21,44,696 was confirmed with interest. The benefit of reduced penalty was denied to the assessee. Aggrieved by the said order, the assessee and department have filed the present appeals.
3. Learned authorized representative for the Revenue submitted that the Commissioner (Appeals), Dehradun had relied upon the decision of the Tribunal, in the case of A.S. Sikarwar Vs CCE, Indore2, and in Hari Narain Khandelwal Vs. CCE3, wherein facts of the both these cases were different. He submitted that in the instant case, the Commissioner (Appeals) had overlooked that land development had been done under different projects namely Vasundhara Palm House, Vasundhara Gurubaksh Green, Vasundhara 2 2012(28) STR 479 3 2017(5) GSTL 277 4 Service Tax Appeal No. 50894 & 51701 of 2019 Eco park etc. under a common area by providing common amenities like Park, Roads, Street Lights, Sewerage system etc. After developing these common areas, plotting of land had been done and these plots were further sold to individual owner of the land for construction of residential house. The assessee had entered into different contracts with each individual owner of the land for construction of residential houses. In view of the definition of residential complex as provided under the Finance Act, the construction activity performed by the party was a part of residential project as the said construction was done in the common area under specified projects viz., Vasundhara Palm House, Vasundhara Gurubaksh Green, Vasundhara Eco park etc. Further, such plots were provided with common amenities. Therefore, the contracts executed by the assessee for construction of residential units under these projects did not qualify for exemption from Service Tax under Notification No. 25/2012-S.T. dated 20.06.2012. Learned authorized representative further submitted that the Commissioner (Appeals), Dehradun had erred by ignoring the fact that in all individual houses shared common area, common amenities like Park, Roads, Street Lights, Sewerage system etc. Learned authorized representative also submitted that as the facts of instant case were consequently totally different from the facts of the case of A.S. Sikarwar (supra). The Commissioner (Appeals), Dehradun had errred by not considering the case in its totality of the activities performed by the assessee. As regards the assessee's appeal, learned authorized representative submitted that they had accepted their 5 Service Tax Appeal No. 50894 & 51701 of 2019 service tax liability on the commercial shops and had paid the same, and not disputed the same before the Commissioner (Appeals). Learned authorized representative further stated that as the assessee had not paid the amount of penalty within 30 days of the issue of order-in-original, hence, the benefit of reduced penalty was not admissible to them.
4. No one appeared on behalf of the assessee. However, the assessee in the grounds of appeal has referred to letter dated 26.10.2016 claiming that single row houses in the form of Villas were not chargeable to tax as these were not residential complex as defined under Section 65(91a) of Finance Act, 1994. The construction had been undertaken based on the contracts for Villa construction with the plot owners, who were entitled for exemption vide S. No. 14(b) of notification 25/2012-ST dated 20.06.2012. The assessee has further submitted that Service Tax under Land Development Charges has been incorrectly considered as Site Formation and Clearance Service whereas the same is chargeable to tax under Work Contract Service; The assessee has also stated that there was no dispute regarding the nature of various services provided by them, which have been clearly recorded in the notice dated 13.01.2017. The show cause notice itself notes that while developing the land for use as residential area, the assessee had undertaken land filling, constructed road suitable for the plots and material while constructing drains and sewerage lines, installation of electric poles for street lighting, construction of boundary for the residential area, Park etc. For undertaking these 6 Service Tax Appeal No. 50894 & 51701 of 2019 activities, the assessee had supplied goods viz., sand or earth for land filling, stone grits of various sizes for preparation of road, including bitumen and applied man and machinery for road laying; supplied bricks, cement, sand and Cement Concrete Pipes etc. for drains and boundary wall and of course electric poles and electric installations and fittings for street lighting and materials like steel fabrication items for Park. Consequently, such service was rightly classifiable as Works Contract Service.
5. We have heard the learned authorized representative for the Department and have perused the records. We will consider each appeal individually.
6. Service Tax Appeal No. 50894 of 2019 - Construction services in respect of residential complex became taxable w.e.f. 16.06.2005. The definition of Construction of Complex as per Section 65 reproduced (30a) of Finance Act 1994 is reproduced below: -
"construction of complex" means -
construction of a new residential complex or a (a) part thereof; or completion and finishing services in relation (b) to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or repair, alteration, renovation or restoration (c) of, or similar services in relation to, residential complex;7
Service Tax Appeal No. 50894 & 51701 of 2019 and the definition of residential complex as per Section 65 (91a) of Finance Act 1994 is as below: -
"residential complex" means any complex comprising of-
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and
(iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person.
Explanation. For the removal of doubts, it is hereby declared that for the purposes of this clause,-(a) "personal use"
includes permitting the complex for use as residence by another person on rent or without consideration; From the definition it is abundantly clear from the above provisions that construction of residential complex having not more than 12 residential units is not sought to be taxed under the Finance Act, 1994. For the levy, it should be a residential complex comprising more than 12 residential units. Admittedly, in the present case, the appellants constructed individual residential houses, which is evident from the 8 Service Tax Appeal No. 50894 & 51701 of 2019 fact that the appellant had entered into different contracts with each individual owner, which has been noted in the order-in-original. In any case, it is clear that the law makers did not want construction of individual residential units to be subject to levy of service tax. We hold that for something to be a residential complex, each individual building should have at least 12 residential units. In the instant case, we note that a piece of land was developed and divided into plots along with some common areas and the plot was sold to each customer. Consequently, we hold that each of these structures is in the form of individual house and the eligible for the exemption.
7. We note that this issue is no more res-integra as the matter stands decided in case the decision of M/s Macro Marvel Projects Vs Commissioner, Service Tax, Chennai4 wherein this Tribunal held that service tax can be levied only if a building concerned has more than 12 units. This decision was upheld by the Hon'ble Supreme Court. 7.1 Similarly, in Arvind Tiwari versus Commissioner of Central Excise and Central Goods, Service Tax, Udaipur5, the Tribunal held as follows:-
"7.3 There has been a change in the above definition w.e.f 01.07.2012. The said change has been discussed by this Tribunal in the case of M/s Lakhlan & Qureshi Constructiion Company Vs. Commissioner of Central Excise and Service Tax, Jaipur-I in Service Tax Appeal No. 55701/2014 decided on 14.10.2019, wherein it has been held that from the definition of residential complex both for the period prior to 01.07.2012 and subsequent thereto construction of residential complex having not more than 12 residential units per building or block prior to 01.07.2012 and two more or more units after 01.07.2012 is not sought to be taxed under provisions of the Finance Act."
4 2008 (12) STR 603 (Tri. Chennai) 5 2024 (1) TMI 582-CESTAT NEW DELHI 9 Service Tax Appeal No. 50894 & 51701 of 2019 7.2 In addition, in M/s P. S. Builders, M/s Gajendra Singh Sankhla, M/s Jeet Construction Company and M/s I.P. Singh Construction Co. Versus Commissioner of Central Excise, Jodhpur6, this Tribunal observed as under:-
"16. The definition of a "residential complex leaves no manner of doubt that it would be a complex comprising of a building or buildings, having more than twelve residential units. In other words a complex may have a building having more than twelve residential units or a complex may have more than one building each having more than twelve residential units. Independent buildings having twelve or less than Twelve residential units would not be covered by the definition of "residential complex.
18. This submission, for the reasons stated above, deserves to be accepted. In this connection reliance can be placed on a Division Bench judgment of the Tribunal in Macro Marvel Projects Ltd. vs. Commissioner of Service Tax, Chennai (2008 (12) STR 603 (Tri-Chennai)] wherein the demand of service tax was for the period 16 June, 2005 to November, 2005 under 'construction of complex' service under section 65(30a) of the Act. The Bench examined the scope of 'construction of complex and the meaning of a 'residential complex' under section 65(91a) of the Finance Act and the observations are as follows:
"It is abundantly clear from the above provisions that construction of residential complex having not more than 12 residential units is not sought to be taxed under the Finance Act, 1994. For the levy, it should be a residential complex comprising more than 12 residential units. Admittedly, in the present case, the appellants constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the law makers did not want construction of individual residential units to be subject to levy of service tax. Unfortunately, this aspect was ignored by the lower authorities and hence the demand of service tax. In this view of the matter, we are also not impressed with the plea made by the appellants that, from 1-6-2007, an activity of the one in question might be covered by the definition of works contract' in terms of the Explanation to section 65 (105)(zzzza) of the Finance Act, 1994 as amended.
According to this Explanation, 'construction of a new residential complex or a part thereof stands included within the scope of 'works contract'. But, here again, the definition of 'residential complex' given under section 6 2023 (7) TMI 481-CESTAT NEW DELHI 10 Service Tax Appeal No. 50894 & 51701 of 2019 65(91a) of the Act has to be looked at. By no stretch of imagination can it be said that individual residential units were intended to be considered as a "residential complex or a part thereof."
7.3 Further, in the case of M/s Quality Builders & Construction versus Commissioner of Customs, Excise & Service Tax, Jodhpur7, this Tribunal held as follows:-
"21. It is true that w.e.f July 01, 2012 "construction of complex is a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex have been exempted."
7.4 Consequently, the departmental appeal is dismissed.
8. Service Tax Appeal No. 51701 of 2019 - This appeal has been filed by the appellant against the demand confirmed on construction of commercial shops and development of land. The assessee has also sought the benefit of reduced penalty as the entire tax liability had been paid before the issuance of the said notice.
9. As regards the demand on construction of commercial shops and development of land, we find that the impugned order has held as follows:-
"6.3 The appellant has not contested the issue of his service tax liability regarding construction of commercial shops and development of land in lieu of development charges from the owner of the land under different projects. It was informed during the personal hearing that he had discharged his tax liability along with interest in respect of development of land for the land owners and construction of commercial shops before the issue of the show cause notice and the same has been appropriated by the adjudicating authority. He has only contended that the benefit of reduced penalty was admissible to him. In this regard, I find that the third proviso to the said Section 78 (1) of the Act makes it clear that the benefit of the reduced penalty is available only if the amount of such 7 2023 (3) TMI 1273-CESTAT NEW DELHI 11 Service Tax Appeal No. 50894 & 51701 of 2019 reduced penalty is also paid within such period. As the appellant has not paid the amount of penalty within thirty days of the issue of the impugned order, the benefit of reduced penalty is not admissible to him."
As the assessee did not take these grounds before the Commissioner (Appeals), hence they are not at liberty to challenge the same before the Tribunal, more so when the leave of the Tribunal was not taken before riasing these grounds in the present appeal.
10. As regards the assessee's plea on reduced penalty, we note that the proviso to Section 78 (1) of the Finance Act, 1994 makes it clear that the said benefit is available only if the reduced penalty is paid within 30 days of the order-in-original. As the same was not paid within such period, the benefit cannot be extended.
11. In view of the above discussions, we uphold the impugned order and dismiss both the appeals.
(Order pronounced in the open Court on 30.04.2025) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y.