Residential complex service tax threshold turned on actual construction; prima facie waiver granted where only 8 units existed.

In a service tax appeal concerning construction of residential units, CESTAT, Chennai found a prima facie case for waiver because only 8 residential units had been constructed up to the date of the show-cause notice, while tax on construction of a residential complex was stated to apply only where more than 12 residential units with common areas and common facilities were constructed. An approved layout plan for 37 units was not, by itself, sufficient at the interim stage to establish liability when the actual construction facts did not match that threshold. Predeposit of service tax, interest and penalties was waived and recovery stayed pending disposal of the appeal.

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Issues: Whether predeposit of service tax, interest and penalties was liable to be waived and recovery stayed pending appeal; whether the appellants had made out a prima facie case on liability arising from construction of residential units.

Analysis: The applicants had constructed only 8 residential units, whereas service tax on construction of a residential complex was stated to be leviable only where more than 12 residential units with common area and common facilities were constructed. The existence of an approved layout plan for 37 units was held, at the interim stage, not sufficient by itself to establish tax liability when only 8 units had in fact been constructed up to the date of the show-cause notice. On that basis, the applicants were found to have a prima facie case for waiver.

Outcome: Predeposit was waived and recovery of the amounts in question was stayed pending disposal of the appeal.

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