Construction of Complex by Cooperative Housing Society to its Members is not Liable to Service Tax: CESTAT [Read Order]

In a recent ruling, the Ahmedabad Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled that the no-service tax is leviable on the construction of a complex by the Cooperative Housing Society (CHS) to its members.

The bench of Ramesh Nair and C L Mahar quashed the impugned order to pay service tax.

The appellant Shantanu Cooperative Housing Society Limited filed the appeal against the confirmation of the demand for service tax along with interest and penalties under the category of ‘Construction of Complex Service’ by the authorities.

The adjudicating authority precisely held that the cooperative society of the Members has provided construction of complex service to its members and the same is liable for service tax.

The appellant asserted that since cooperative societies and their members did not have a relationship of service provider and service recipient, the services they offered to their members constituted mutuality of interest and were not subject to service tax.

The tribunal observed the decision in the case of M/s. Shrinandnagar- Cooperative Housing Society Limited by the Gujarat High Court,  involving the identical facts, wherein the appellant deposited some amount of service tax for which they had claimed the refund. The court allowed the refund.

The referred case was initially decided by the Tribunal in which it was observed that in the absence of a contractor hired by Society and the nature of the transaction between the parties and in the light of the definition of service and its liability for service tax, the transaction, in this case, cannot be considered taxable.

The tribunal observed the circular issued by the board on clarification that any service provided by such seller in connection with the construction of the residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax.

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