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of <h1>Construction for sale not taxable pre-2010 amendment. Pre-deposit waived pending appeal. Stay granted.</h1> <h3>BAIRATHI DEVELOPERS PVT. LTD. Versus COMMISSIONER OF C. EX., JAIPUR</h3> BAIRATHI DEVELOPERS PVT. LTD. Versus COMMISSIONER OF C. EX., JAIPUR - 2012 (26) S.T.R. 114 (Tri. - Del.) Issues:1. Whether the construction activity of the appellant attracts Service tax under specific sections of the Finance Act, 1994.2. Whether the appellant's activity of constructing residential complexes for sale constitutes taxable services under Section 65(105)(zzzh) of the Finance Act, 1994.3. Whether the appellant's liability for short payment of Service tax and imposition of penalties under Sections 76 and 78 of the Finance Act, 1994 is justified.4. Whether the requirement of pre-deposit of Service tax demand, interest, and penalty should be waived for the hearing of the appeal.Analysis:1. The appellants, engaged in constructing residential complexes, entered into agreements with landowners to build properties for sale. The dispute arose when the department claimed that the appellant's activity attracted Service tax under specific sections of the Finance Act, 1994. The department alleged a short payment of Service tax, leading to a show cause notice for demand and penalties under Sections 76 and 78 of the Finance Act, 1994.2. The main contention was whether the appellant's construction activity constituted taxable services under Section 65(105)(zzzh) of the Finance Act, 1994. The appellant argued that they did not provide any service of construction to the landowners or the buyers of the flats from the complexes. They relied on a judgment by the Gauhati High Court, stating that construction of residential complexes against purchase agreements is not a taxable service.3. The Commissioner (Appeals) upheld the Addl. Commissioner's order confirming the Service tax demand and penalties. The appellant argued that the construction of flats for buyers did not constitute a taxable service before the relevant amendment in the Finance Act, 2010. The Tribunal noted the conflicting judgments of the Gauhati High Court and the Punjab & Haryana High Court regarding the taxability of such construction activities.4. After considering the submissions and legal precedents, the Tribunal found that prior to the 2010 amendment, the construction of flats by the appellant for prospective buyers did not amount to a taxable service. Citing the judgments of the Gauhati High Court and the Punjab & Haryana High Court, the Tribunal waived the pre-deposit requirement for the Service tax demand, interest, and penalties pending the appeal hearing. The stay application was allowed, and recovery was stayed until the appeal's disposal.
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