2012 (10) TMI 794 - AT - Service Tax

CESTAT rules on service tax liability for residential construction, remands for fresh evaluation.

The Appellate Tribunal CESTAT, Ahmedabad addressed the service tax liability on the construction of residential premises. The Tribunal found the issue to ... Stay petitions – Whether Liability of Service tax arise on the services of a Builder himself if he is constructing residential complex – Held that:- As circular dated 21.01.2009 discusses about the issue, which needs reconsideration by the lower authorities after perusing the agreement entered into by the perspective customers or buyers of the flats. As both the lower authorities have not considered the Board Circulars dated 21.01.2009 and 10.02.2012. Appeal remand back to AO for fresh consideration stay granted. Issues:Service tax liability on construction of residential premises.Analysis:The judgment by the Appellate Tribunal CESTAT, Ahmedabad dealt with the issue of service tax liability on the construction of residential premises. The Tribunal noted that all three stay petitions raised a common issue and decided to dispose of them through a common order. The main contention revolved around whether service tax liability applied to the appellants under the category of construction of residential premises. The Tribunal found the issue to be narrow in scope and decided to allow the stay petitions, proceeding to take up the appeals for disposal.The appellant's counsel argued that the lower authorities had not considered specific Board Circulars dated 21.9.2009 and 10.2.2012, which clarified that service tax liability did not arise on the services of a Builder constructing a residential complex. The Tribunal, after hearing the departmental representative and reviewing the record, observed that the appellant had raised this point before the lower authorities. It was noted that the circulars discussed the issue, suggesting that the lower authorities should reconsider the matter after examining the agreements with the prospective customers or flat buyers. As the lower authorities had not taken into account the Board Circulars, the Tribunal decided to remand the matters back to the adjudicating authority for a fresh consideration in light of these circulars.The Tribunal, without expressing any opinion on the merits of the case, set aside the impugned orders and directed the adjudicating authority to reevaluate the issue following the principles of natural justice. The appeals were allowed by way of remand, providing an opportunity for the adjudicating authority to reconsider the service tax liability issue in accordance with the Board Circulars.