No Service Tax on Chhatisgarh Housing Board for Construction Works done through Contractors: CESTAT [Read Order]

Service Tax - GST - CESTAT - Taxscan

The CESTAT, Delhi bench has held that the Chhatisgarh Housing Board cannot be made liable for service tax for the construction activities carried through contractors.

The appellants were asked to pay service tax for the construction of residential complex.

The appellants claimed that they have not undertaken any construction activity of residential units since the entire work was entrusted to the contractors through tender process. They neither have infrastructure, nor the work force required for construction activities. They were collecting only certain supervision/contingency charges from the allottees of the houses. The land and construction cost is recovered from the allottees on cost basis. They are not adding any value to the construction work done by the contractors.

It was further contended that the contractors, who actually undertake the construction work duly, discharged the Service Tax liability as per law and the appellant reimbursed the amount of Service Tax deposited by the contractors, based on the Service Tax challans furnished by the contractors.

The division bench agreed with the above submissions of the appellants and observed that if the construction activity is in effect carried out by the contractors in terms of an agreement with the appellants, it will be the contractors who will be considered as service providers. The appellant will be service recipient.

“The appellants monitor the construction and managed the allotment and sale of these constructed houses. In our opinion, this by itself does not make the appellant as a provider of construction service. This aspect has not been examined by the lawyer authorities. We find substantial force in the plea of the appellant on this ground.”

While remanding the matter back to the files of the Original authority, the bench directed that “in case it is established by supporting evidence that the construction activities were in fact carried out by the contractors and such contractors have discharged applicable Service Tax on such work, there can be no liability to Service Tax on the appellant for the same work.”

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