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No Service Tax on Development of Slum Area for Plotting: CESTAT [Read Order]

Service Tax

The Delhi CESTAT, in M/s Tirathdas Shaukat Rai Construction Pvt. Ltd v. CCE, Indore, held that service tax cannot be levied on the development of slum area for plotting as the same would not constitute ‘construction services’ of residential units.

The appellant, engaged in construction activities were aggrieved by the order of the department wherein service tax was demanded in respect of construction of residential units for Indore Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission Scheme for economically weaker sections and the development of plots for accommodation of people in slum locality under Valmiki Awas Mission- Baba Saheb Ambedkar Yojana for economically weaker sections as developed by Government of Madhya Pradesh.

The department was of the view that the appellants are liable to pay Service Tax under the category of Construction of Residential Complex Service.

Before the Tribunal, the appellant contended that there is a specific exemption under Notification 28/2010 ST dated 22/06/2010 for construction under JNNURM Scheme. Regarding the second activity, there is no construction at all in this, only development of cleared slum area for further use for improvement and construction. They urged that they are not involved in construction units under the said scheme.

Granting relief to the appellants, the Tribunal bench held that the construction of residential units for EWS JNNURM for Indore Municipal Corporation is clearly covered by exemption Notification 28/2010 ST dated 22/06/2010.

“On the second issue, we note that the appellants are not engaged in any construction of residential units. They were mainly engaged in the development of plots in the slum locality in terms of an arrangement with the main contractor for Government of Madhya Pradesh. We note while dealing with the said contract in respect of tax liability of the main contractor of the appellant the Original Authority recorded the fact to the effect that there was no construction of residential complex and as such, no tax liability will arise. The Ld. Counsel categorically stated that the contract does not involve the construction of any residential units. It is only for the development of slum area for plotting etc,” the bench said.

 

To Read the full text of the Order CLICK HERE
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