2018 (9) TMI 1066 – CESTAT CHENNAI – TMI – Construction Services – Commercial or Industrial Construction Service – Construction of Residential Complex Service – demand of service tax.
–
Commercial or Industrial Construction Services – it is submitted that the said building was constructed for the appellant’s own use as an office – Held that:- The period involved is from 10.09.2004 to 30.06.2008. The demand for the period prior to 01.06.2007 cannot sustain as per the decision laid by the Hon’ble Apex Court in the case of Larsen and Toubro Ltd. [2015 (8) TMI 749 – SUPREME COURT] – demand set aside.
–
Construction of Residential Complex Services – appellant has constructed two complexes, namely, Nelson Square and Krishna Sarathy – Held that:- In the present case, the appellant has not engaged any other person for construction and construction activity was carried out on his own. The land belonged to him as he had purchased the right/share of the land from M/s. Nelson Type Foundry
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
dhu Mohan Damodhar, Member (Technical) Shri S. Venkatachalam, Advocate for the Appellant Shri A. Cletus, ADC (AR) for the Respondent ORDER Per Bench, The appellants are engaged in construction services and registered with the Service Tax Department on 08.09.2008. Based on enquiry conducted, Show Cause Notice dated 24.06.2009 was issued to the appellants proposing to demand service tax on Maintenance and Repair Services, Commercial or Industrial Construction Service and Construction of Residential Complex Service. After due process of law, the demands were confirmed along with interest and penalties were imposed. Aggrieved, the appellants are now before the Tribunal. 2. On behalf of the appellant, the learned Counsel, Shri S. Venkatachalam, submitted that the appellant is not contesting the demand in respect of Maintenance or Repair Services. In regard to the demand relating to Commercial or Industrial Construction Service, it is submitted that the building was constructed for the own u
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t of 56½% of undivided share of land. The agreement also stipulated that the developer/appellant will be entitled to dispose of 56½% of the super built up area of the ownership flats to prospective buyers. The agreement would show that the land owner conveyed 56½% of undivided share in the land to the appellants and the balance was retained by the land owner. The appellant, accordingly, entered into agreement to sell the Undivided Share (UDS) with the prospective buyers, using the power of attorney given in favour of the appellants. After construction of flats, the sale deed was executed for sale of flat along with undivided share of land to the buyers. The Department has demanded the service tax, alleging that the agreement to sell the UDS, which was prior to execution of sale deed, has transferred the right over the land to the prospective buyer and the land does not belong to the appellant and that, therefore, the appellant is liable to pay service tax. In fact,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
own use. He relied upon the decisions in the case of Vijay Shanthi Builders Limited Vs. CST -2018 (9) G.S.T.L. 257 (Tri.- Chennai), Krishna Homes Vs. C.C.E. – 2014 (34) S.T.R. 881 (Tri.-Delhi) and M/s. Creations Vs. CST Chennai (Final Order No. 41649-41651/2018 dt. 09.05.2018). It is also submitted by him that part of the demand is prior to 01.06.2007 and, therefore, not subject to levy of service tax as decided by the Hon ble Apex Court in the case of C.C.E. & Cus. Vs. Larsen and Toubro Ltd. – 2015 (39) S.T.R. 913 (S.C.). 3. The learned AR, Shri A. Cletus, supported the findings in the impugned order. He submitted that the appellants have executed an agreement with the prospective buyers for sale of the undivided share of land and, therefore, the land, having been registered in the name of the prospective buyer, the Board Circulars will not assist the appellants. The demand has been rightly confirmed. 4. Heard both sides. 5. The appellants have submitted that they are not contest
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
transferred to the prospective buyer and, therefore, since the land does not belong to the appellant, the construction is not for oneself but for the prospective buyer and would attract levy of service tax. We have perused the agreement entered by the appellant, as power of attorney holder of M/s. Nelson Type Foundry Pvt. Ltd, with the prospective purchasers of flat. On perusal, we are able to see that these agreements are only agreements to sell. The Department has raised the demand on the wrong notion that these are agreements of sale and that the appellant has transferred the right, title and ownership of the land to the prospective buyers before completion of construction of flats. The Board, vide Circular No. 332/35/2006 – T.R.U. dt. 01.08.2006 has clarified that if no other person is engaged for construction work and the builder undertakes construction work on his own in the land belonging to him without engaging the services of any other person, then there is no service provide
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
to 01.07.2010 for the reason that the explanation to Section 65(105)(zzzh) was added only on 01.07.2010. The land remained in the ownership of the appellants till completion of construction of flat. Thereafter, sale deed was executed to the buyer, whereby right/title/interest in undivided share of land as well as the flat is transferred to the buyer. The Tribunal had occasion to analyse a similar issue in the case of M/s. Creations vide Final Order No. 41649-41651/2018 (supra). So also in the case of Vijay Shanthi Builders Ltd. Vs. C.S.T. Chennai (supra), the said issue was considered and held that no service tax is payable when the developer has constructed the flats in the land belonging to him. We, therefore, find that the demand of service tax on construction of Residential Complex Services cannot sustain and requires to be set aside which we hereby do. 10. From the above discussions, the impugned order is modified to the extent of setting aside the demand in respect of Commercial
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =