Ownership of Land without Rendering of Any Service is Not a Relevant Condition for Determining Service Tax Liability: CESTAT [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the ownership of land without rendering any kind of services was not a relevant condition for determining the taxable service. 

Green House Promoters Pvt. Ltd, the appellant assessee registered with the Service Tax Department for providing construction services in respect of commercial or Industrial buildings and civil structures and was engaged in construction services and real estate business and purchased lands from various individuals by executing valid sale deeds or by way of Irrevocable General Power of Attorney (GPA) and the transaction was recognized as a valid transfer of property under Section 53A of the Transfer of Property Act,1882. 

The assessee appealed against the order passed by the Commissioner of Service Tax for confirming the demand of Rs.5,30,04,265/- along with appropriate interest and also the imposition of penalties. 

Radhika Chandrasekar, the counsel for the assessee contended that taxable activity was service about site formation and clearance, excavation and earthmoving and demolition, and such other similar activities rendered ‘to any person, by any other person’. 

Further submitted that since the activity of site development, in this case, was self-service, no service tax was payable under the prescribed law. 

N. Satyanarayanan, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was engaged in the promotion of layouts/ projects which are then marketed as plots/ land for residential construction for individual customers/ commercial customers and they collected development charges from the buyers which were taxable under the law. 

The Bench observed that the ownership of the land where the service rendered not mentioned was not a relevant condition for determining the taxable service and when the land owner rendered any services for consideration, the service tax liability would lie on the person who renders any service. 

The two-member bench comprising P.Dinesha (Judicial) and Ajit Kumar (Technical) held that the land owner who rendered any service or made any land activities for consideration would be taxable under the category of ‘Site Formation and Clearance Service’ under section 65(105)(zzza ) of the Finance Act, 1994.

To Read the full text of the Order CLICK HERE

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