The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the service tax not leviable on ground that the show cause notice (SCN) alleges rendering of commercial or industrial construction service.
The appellant, M/s JMD Ltd, is engaged in developing projects both commercial and residential. It had developed JMD Goverdhan City Centre at Ludhiana, JMD Galleria Project at Gurgaon and JMD Megapolis (IT Park) Project at Gurgaon with the owners of the land on which such projects were developed. Under these agreements, the appellant constructed the buildings with the land owners in an agreed manner.
A show cause notice was issued to the appellant proposing to demand service tax on the aforesaid transactions alleging that the appellant provided commercial or industrial construction service as defined under section 65 (25b) of the Finance Act, 1994 and made taxable under section 65 (105) (zzq).
P.K. Sahu, counsel for the appellant has submitted that the finding recorded by the Additional Director that the services rendered by the appellant would not fall under the category of works contract services is not correct. It is his submission that it was never in doubt that the work performed by the appellant involved both supply of service and goods and, therefore, in view of the decision of Supreme Court in Larsen and Toubro Ltd., no service tax could not have been demanded prior to 01.06.2007 and even after 01.06.2007 the demand that has been confirmed has to be set aside for the reason that neither the show cause notice alleged that the service rendered by the appellant would fall under works contract service nor the Adjudicating Authority held so.
Rajeev Kapoor, authorized representative has supported the impugned order and has submitted that it does not call for any interference in this appeal.
A Two-Member Bench of the Tribunal comprising Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “No service tax could have been demanded from the appellant prior to 01.06.2007 and for the period post 01.06.2007 the demand of service tax cannot be sustained for the simple reason that the show cause notice alleged that the appellant had rendered commercial or industrial construction service and the Adjudicating Authority has also confirmed the demand under this head.”
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