M/s. Krishna Constructions Versus C.C.E, Chennai I Commissionerate ‘The Commissioner of GST & Central Excise, Chennai South Commissionerate’
Service Tax
2018 (9) TMI 1066 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 26-6-2018
Application No. ST/Misc[CT]/41109/2017, Appeal No. ST/383/2011 – Final Order No. 41904/2018
Service Tax
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu 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
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ivided share of land in favour of the appellant in consideration of discharge of the mortgage and also agreeing to hand over a particular number of flats to the land owner. Accordingly, it was agreed to convey 56½% sq. ft. of undivided share of land in favour of the appellant. A comprehensive general power of attorney in favour of the appellant was executed, so as to facilitate registration of sale deeds in respect 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 constructi
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sue of completion certificate subject to levy of service tax. In the present case, the period involved is prior to 01.07.2010 and, therefore, even if appellant received advance payments, the demand cannot sustain being prior to 01.07.2010. He argued that since the land always belonged to the appellant, and the appellants, having not appointed any other contractor for construction activity, the construction service is for 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
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n and Toubro Ltd. (supra), and requires to be set aside, which we hereby do.
8. The issue that remains for analysation is the demand in respect of Construction of Residential Complex Services. The appellant has constructed two complexes, namely, Nelson Square and Krishna Sarathy.
9. The Department has relied heavily upon the agreement entered with prospective buyer to allege that the undivided share of land (UDS) has been 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 tr
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in the land was handed over to the appellants and, in turn, it was agreed to hand over certain portions of constructed area (flats) to land owner. The flats which are handed over to the land owners were for their own use as a consideration for the undivided share of land. Though the appellants may have received payments prior to completion of the flats from prospective buyers, these amounts do not attract service tax prior 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 is
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