In a significant ruling, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not leviable from owners of flats constructed for personal use.
M/s. Rani Meyyammai Towers, the assessee challenged the Order-in-Original passed by the Commissioner of Central Excise, Chennai. The assessee has undertaken the construction of 128 flats in Rani Meyyammai Towers, Phase II which was started in November 2006, through M/s. South India Corporation Limited the assessee agrees with the construction of a flat.
The Internal Audit Group of the Service Tax Commissionerate had conducted an audit of the accounts of the appellant wherein it was noticed that the appellant had not been paying Service Tax under Construction of Complex Service (‘CCS’).
A Show Cause Notice was issued wherein it was observed that the assessee is liable to pay service tax under the category of Construction of Complex Service from February 2007. However, it was noticed they started paying service tax in December 2007 under “Works Contract Service” and proposed to pay service tax under “Construction of Complex Service” from February 2007 onwards.
The appellant filed its replies denying any tax liability, but however, not satisfied with the same, the impugned common Order-in-Original has been passed, wherein the demands proposed in the Show Cause Notices, inter alia, of Service Tax under CCS for the periods from February 2007 to June 2010 and July 2010 to March 2011, have been upheld.
The CESTAT viewed that the appellant by the construction agreements entered into with their prospective buyers, in essence, was rendering works contract service in the construction of flats and this aspect has not been denied by the Revenue either in the Show Cause Notices or in the impugned order.
The CESTAT, in the case of M/s. Real Value Promoters Pvt. Ltd. has held that in respect of projects executed before 01.06.2007, being like composite works contracts, could not be brought within the fold of commercial or industrial construction service or construction of complex service and for the period post 01.06.2007, the liability to Service Tax could be fastened only if the activities were like services simpliciter.
The two-member tribunal bench comprising Mr P Dinesha,(Judicial) and Mr Vasa Seshagiri Rao,(Technical) observed that there is no Service Tax liability as and when the construction of the flat is for the personal use of the service recipient.
The Tribunal set aside the demand, as confirmed in the impugned order and allowed the appeal. Shri K.A. Parthasarathi, Advocate appeared for the appellant and Smt. K. Komathi, Additional Commissioner appeared for the respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
