No Liability for paying Tax either under ‘Construction of Complex Service’ or ‘Works Contract’ would lie on Builder or promoter prior to 01.07.2010: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that there is no liability for paying tax either under ‘construction of complex service’ or ‘works contract’ would lie on builder/developer/promoter prior to 01.07.2010.

The allegations against the assessee, M/s. South India Shelters Private Limited, are that they were engaged in the construction of residential complexes, which became taxable on 16.06.2005, but they have taken registration with the Department only during June 2008 and that they also have not filed periodical ST-3 returns.It appeared to Revenue that the assessee did not pay appropriate Service Tax on the construction activity, under the classification ‘Construction of Residential Complex Service’.

The Counsel for the assessee contended that a developer of residential complex is not liable to pay Service Tax for the period prior to 01.07.2010; as per the Central Board of Excise and Customs (C.B.E.C.) Circular No. 108/02/2009-S.T. dated 29.01.2009, construction services provided by the builder/developer will not be taxable for the period prior to 01.07.2010.

The Counsel further stated that the demand for the period from May 2006 to September 2009 is barred by limitation since the Show Cause Notice is dated 04.04.2011 and none of the ingredients set out in the proviso to Section 73(1) of the Finance Act, 1994 have been met.

R Rajaraman, AR appearing for Revenue, has stated that Section 65(105)(zzzh) of the Act specifies construction of complex service as taxable service from 16/06/2005. Just because Contract Service was brought under the service tax levy from 01/06/2007 does not mean that such services provided by the assessee was not taxable prior to 01/06/2007.

Works Contract Service came under Service Tax levy with the introduction of section 65(105)(zzzza) in the Finance Act 1994 from 01/06/2007.

The two member Bench of P Dinesha, Judicial Member and M Ajit Kumar, Technical Member observed that “Since the period where duty has been demanded in the impugned order is prior to 01/07/2010, no liability for paying tax either under ‘construction of complex service’ or ‘works contract’ would lie on the builder/developer/promoter during the period covered by the impugned order.

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