The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently held that residential complex constructed for residence of employees should be exempt from payment of service.
During the course of audit of financial records of the Appellant, Patel Construction Co., the officers of Central Excise, observed that the Appellant has also shown value of service charged against exempted services in their ST-3 returns filed for services under the taxable category of ‘Commercial or Industrial Construction Service’.
After verifying the various services provided by the appellant, the bench found that appellant constructed residential colony of Kandla Port Trust for residence of employees of Kandla Port Trust.
The Commissioner confirmed the demand of Rs. 21,53,044/- under the category of construction of residential complex services without considering the explanation to Section 65(90a) of the Finance Act. Against the action appellant filed an appeal before the bench.
Amal Dave, appellant counsel submitted that appellant is exempted from the payment of service as per Notification No. 25/2007. When a residential complex is constructed for the residence of the employees, then it is exempt from the payment of service tax as per the notification of service tax.
The Commissioner confirmed the demand of Rs. 21,53,044/- under the category of construction of residential complex services without considering the explanation to Section 65(90a) of the Finance Act whereby there is an exclusion clause to eligibility of the activity of constructing the residential complex, if it is indented for personal use.
Rajesh Agarwal, counsel for the revenue supported the order passed by the assessing officer.
The bench observed that the Adjudicating authority has not dealt with the issue of service provided under the category of ‘construction of complex service services’ in proper perspective.
It was also determined that Appellant claimed that they had not constructed any building or part thereof, having more than 12 residential units. Further the bungalow constructed by the appellant at KPT colony for use by the employees of Kandla Port Trust is for personal use hence not taxable.
Thereafter, the bench of Ramesh Nair (Judicial) and Raju (Technical) remanded the matter back to the adjudicating authority for re-appreciation of the claim of the appellant.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
