M/s. Siva Engineering Company Versus Commissioner of GST & Central Excise Coimbatore
Service Tax
2019 (2) TMI 87 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 20-11-2018
Appeal No. ST/424/2012 – Final Order No. 43023/2018
Service Tax
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
Shri V.S. Manoj, Advocate for the Appellant
Ms. T. Usha Devi, DC (AR) for the Respondent
ORDER
Per Bench
The appellant is engaged in execution of works contract. They were engaged by Tamil Nadu Police Housing Corporation Ltd. (TNPHCL) which is a Government of Tamil Nadu company wherein 100% of the shares are held by Tamil Nadu Government for construction of police quarters. A show cause notice was issued to them proposing to demand service tax under the category of 'Construction of Residential Complex Service' for the period from February 2006 to February 2008. After due process of law, the original authority confirmed the demand,
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TR 815. That this Tribunal in the case of Commissioner of Central Excise Vs. Lanco Tanjore Power Co. Ltd. vide Final Order No. 40792 & 40793/2018 dated 16.3.2018 held that when construction activity is undertaken for personal use, the same is excluded from the definition of residential complex contained in Section 65(91a) of Finance Act, 1994. The appellants were engaged by TNPHCL to construct quarters for police personnel. The contract was awarded vide GO No. 576 dated 8.7.2005 issued by the Government of Tamil Nadu. Since the quarters were constructed for the use of police personnel, the same is outside the purview of definition of construction of residential complex, as it is covered by the Explanation to the said definition. The ownership of the houses constructed vests with the Government of Tamil Nadu who allots houses to police personnel. There is no profit motive involved in these transactions and there is no renting or letting of these quarters for commercial purposes. The lan
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idential complex is reproduced as under:-
As per section 65[(30a) of the Finance Act, 1994, „construction of complex‟ means :-
(a) construction of a new residential complex or a part thereof; or
(b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or
(c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex;]
As per Section 65(91a) of the Finance Act, 1994 „residential complex‟ means any complex comprising of:-
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and
(iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent
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ates (supra), wherein the Tribunal has observed as under:-
“7.1 In this case there is no dispute and it clearly emerges that the residential complex was built for M/s. ITC Ltd. and appellant was the main contractor. Appellant had appointed sub-contractors all of whom have paid the tax as required under the law. The question that arises is whether the appellant is liable to pay service tax in respect of the complex built for ITC. From the definition it is quite clear that if the complex is constructed by a person directly engaging any other person for design or planning or layout and such complex is intended for personal use as per the definition, service tax is not attracted. Personal use has been defined as permitting the complex for use as residence by another person on rent or without consideration. In this case what emerges is that ITC intended to provide the accommodation built to their own employees. Therefore it is covered by the definition of 'personal use' in the explanation.
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ract with GOI, engages a sub-contractor for carrying out the whole or part of the construction, then the sub- contractor would be liable to pay Service Tax as in that case, NBCC would be the service receiver and the construction would not be for their personal use.
It can be seen that if the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. It is quite clear that C.B.E.&C. also has clarified that in cases like this, service tax need not be paid by the builder/developer who has constructed the complex. If the builder/developer constructs the complex himself, there would be no liability of service tax at all. Further in this case it was different totally, the appellant, has engaged sub-contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion,
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y or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person.
Explanation. For the removal of doubts, it is hereby declared that for the purposes of this clause,
(a) 'personal use' includes permitting the complex for use as residence by another person on rent or without consideration;
(b) 'residential unit' means a single house or a single apartment intended for use as a place of residence;
The above definition specifically excludes construction undertaken for personal use and such personal use includes permitting the complex for use as residence by another person. We find that the above exclusion clause covers the construction activity undertaken by
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