Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Lanco Tanjore Power Co. Ltd on 16 March, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. ST/45/2011
(Arising out of Order-in-Appeal No. 164/2010 (P-ST) dated 20.10.2010 passed by the Commissioner of Central Excise (Appeals), Chennai)
Commissioner of Central Excise, Puducherry Appellant
Vs.
M/s. Lanco Tanjore Power Co. Ltd. Respondent
Appeal No. ST/541/2011 (Arising out of Order-in-Appeal No.127/2011 (P-ST) dated 17.6.2011 passed by the Commissioner of Central Excise (Appeals), Chennai) Commissioner of Central Excise, Puducherry Appellant Vs. M/s. Senthil Constructions Respondent Appearance Shri S. Govindarajan, AC (AR) for the Appellant Shri Joseph Prabhakar, Advocate for the Respondents CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing / Decision: 16.03.2018 Final Order Nos. 40792-40793 / 2018 Per Bench The present appeals are filed by Revenue against the Order-in-Appeal No. 127/2011 dated 17.6.2011 and Order-in-Appeal No. 164/2010 dated 20.10.2010.
2. The facts in Appeal No. ST/541/2011 are that during the period April 2008 to June 2009 that M/s. Senthil Constructions (Assessee) was engaged by M/s. Lanco Tanjore Power Co. Ltd. (herein after referred to as M/s.Lanco) for construction of quarters for use by the employees of M/s. Lanco. The assessee carried out the construction of quarters which were charged to service tax under the category of residential complex defined under section 65(91a) of the Finance Act, 1994. Commissioner (Appeals) vide the impugned order dated 17.6.2011, set aside the demand of service tax and held that since the residential complex has been constructed for the personal use of the employees of M/s. Lanco, it falls within the exclusion clause of the definition of residential complex and no service tax will be liable. Aggrieved by the same, Revenue has filed the present appeals.
3. In respect of Appeal No. ST/45/2011, M/s. Lanco claimed refund of the service tax paid by the service provider (assessee) who was engaged for construction of quarters for the employees. Assessee claimed that since the construction of residential complex was meant for the personal use of the employees of M/s. Lanco, no service tax is payable and service tax paid by the assessee and which was reimbursed by M/s. Lanco may be refunded. Vide the impugned order dated 20.10.2010, the Commissioner (Appeals) permitted refund of such service tax subject to satisfaction of the provisions of Section 11B. Revenue has challenged this order in the present appeal.
4. The issue involved in both the appeals is construction of residential complex. M/s. Lanco has engaged the assessee as contractor for construction of residential complex for use as quarters by its employees. The ld. counsel appearing on behalf of the respondents has submitted that such construction of residential complex will come within the definition of personal use figuring in the Explanation under section 65(91a) of the Finance Act, 1994. He also relied on the decision of the Tribunal in the case of Nithesh Estates Ltd. vs. Commissioner of Central Excise 2015 (40) STR 815 (Tri. Bang.).
5. The ld. AR for Revenue justified the grounds of appeal. He referred to Boards Circular No. 332/16/2010-TRU dated 24.5.2010 in which the Board has clarified that service tax is not liable on construction of residential houses by the NPCC for Central Government officers. He further drew our attention to para 3 of the Circular in which Board has clarified that any sub-contractor engaged by NBCC for carrying out construction even for Central Government will be liable for payment of service tax.
6. We have heard both sides and perused the records.
7. Construction of residential complex activity was carried out by the assessee for M/s. Lanco. It is submitted that such residential units were constructed for use as quarters of the employees of M/s. Lanco. It is evident from the facts of the case that M/s.Lanco has engaged the assessee with the specific purpose of construction of such residential units which are meant for personal use of the employees of M/s. Lanco. We extract below the statutory definition of section 65(91a) of the Finance Act, 1994:-
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;
(b) residential unit means a single house or a single apartment intended for use as a place of residence; The above definition specifically excludes construction undertaken for personal use and such personal use includes permitting the complex for use as residence by another person. We find that the above exclusion clause covers the construction activity undertaken by the assessee.
8. We have gone through the case law relied upon by the respondents where a similar case has been dealt with by the Tribunal. Following the decision of the Tribunal in Nithesh Estates Ltd. (supra), we find no reason to interfere with the impugned orders which are sustained and the appeals filed by Revenue are rejected.
(Dictated and pronounced in open court)
(V.Padmanabhan) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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