2013 (8) TMI 418 - AT - Service Tax

Tribunal rules on taxable service for housing complex, upholds demand with interest & penalty

PSK Engineering Constructions & Co. Versus Commissioner of Central Excise, Salem

PSK Engineering Constructions & Co. Versus Commissioner of Central Excise, Salem - 2014 (33) S.T.R. 36 (Tri. - Chennai) Issues:1. Whether the construction of a housing complex for fishermen by an applicant for a Rural Development Society constitutes a taxable service under the definition of Residential Complex.2. Whether the demand for service tax for the period July 06 to March 07, along with interest and penalty, is justified.3. Whether the construction activity falls under the definition of works contract taxable from 01.6.07.4. Whether the demand is time-barred due to the issuance of the show cause notice on 10.10.2011.Analysis:1. The case involves the construction of a housing complex for fishermen by the applicant for a Rural Development Society. The Revenue argues that the complex falls under the definition of Residential Complex at section 65(91a), requiring payment of service tax. The applicant contends that the houses were for personal use of the fishermen, thus not falling within the said definition. Reference is made to precedents where residential complexes for specific groups were deemed not taxable under similar circumstances.2. The Revenue asserts that the residential units were not for personal use of the applicant or its members but were allotted to fishermen. It is argued that the definition excludes cases where buildings are constructed for personal use or for renting. The Revenue highlights that the applicant failed to disclose crucial information, justifying the invocation of the extended period of limitation for the demand.3. The applicant argues that the works contract became taxable only from 01.6.07 with the introduction of a specific entry in the Finance Act'94. However, the Tribunal disagrees, stating that the levy under the new entry for works contract covers construction of residential complexes already taxed under a previous entry. The Tribunal finds the argument regarding time bar weak in this context.4. The Tribunal deliberates on whether the residential units could be considered for personal use, emphasizing that if the property is transferred to another person, it may not be deemed for personal use. Acknowledging the applicant as an NGO, the Tribunal orders a pre-deposit for appeal admission, waiving the balance dues subject to compliance. The decision is pronounced in open court on 17.6.13, with a compliance report due on 30.8.2013.