Service Tax Leviable on Land Development Activity Rendered for Consideration Classifiable Under Category of ‘Site Formation and Clearance Service’: CESTAT Upholds Service Tax Demand [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the demand for service tax on the ground of service tax leviable on land development activity rendered for consideration which was classified under the category of site formation and clearance 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 the assessee was not liable to pay any service tax as being Power of Attorney holders of the land, they are its owners and the activity was only self-service. 

Further submitted that the demand for service tax raised by the department to the assessee was not as per the law and liable to be deleted. 

N. Satyanarayanan, the counsel for the department contended that the land development activities are independent and not incidental to the sale and the assessee was liable to pay service tax on the development activity undertaken on the land belonging to other landowners and for which activity he had received a consideration. 

The Bench observed that the activity of land development as rendered by the assessee for consideration and liable to Service Tax as per the taxable service ‘Site Formation and Clearance Service’ under section 65(105)(a) of the Finance Act, 1994. 

The two-member bench comprising P.Dinesha (Judicial) and Ajit Kumar (Technical) upheld the demand for service tax raised by the department while dismissing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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