Service Tax Demand on Construction of Complex Service: CESTAT Sets Aside Demand for Individual Houses [Read Order]

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)sets aside demand for service tax on the construction of individual houses under the 'Construction of Complex Service.'

K.B. & Co,appellant-assessee,was involved in the construction of individual houses for Tsunami-affected people from 01.04.2008 to 31.03.2010. The assessee was awarded a contract by the Chairman of Tsunami District Implementation Unit (TDIU) to build 246 houses under the Rajiv Gandhi Rehabilitation Programme in Tamil Nadu.

The appellant argued that the contract was for rebuilding houses, not constructing residential complexes. Therefore, they claimed their work didn’t fall under the definition of ‘Construction of Complex Service’ under the Finance Act, 1994. Since more than 12 independent houses were built, they argued the service wasn’t taxable under Section 65(105)(zzh).

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The two member bench comprising M.Ajit Kumar(Technical Member) and P.Dinesha(Judicial Member), after hearing both sides, focused on whether the demand for service tax under 'Construction of Complex Service' was legally valid.

Read More: CESTAT sets aside Service Tax Demand for Commercial and Industrial Construction Services

The impugned order referred to a statement by the assessee’s proprietor, which confirmed that more than 12 individual houses were constructed, and this was not disputed by the Revenue. The appellate tribunal concluded that since the appellant built individual residential units, which were not covered under ‘Construction of Complex Service,’ the demand for service tax was not applicable.

The CESTAT also referred to a previous case where it was ruled that constructions of residential units with fewer than 12 units were not taxable under the Finance Act, 1994. Based on this, the bench decided that the service tax demand in the current case could not stand and set aside the order.

In short,the appeal filed by the assessee was allowed for consequential relief.

To Read the full text of the Order CLICK HERE

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