Advance receipts in flat sales did not by themselves establish taxable construction service; unconditional pre-deposit waiver was granted.

Advances received by a builder during construction of a residential complex were treated as insufficient, at least prima facie, to establish taxable service merely because flats were sold on completion. The Tribunal noted that the issue was already covered by a Gauhati High Court decision and earlier stay orders, and it also relied on a Board circular stating that no service tax liability arises against builders selling flats. On that basis, the appellants were found to have a good prima facie case and were granted unconditional dispensation of pre-deposit.

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Issues: Whether, on the facts of the case, the appellants had made out a prima facie case for unconditional waiver of pre-deposit of service tax demanded on construction of residential complex.

Analysis: The appellants were constructing residential complex on their own land for sale of flats to prospective buyers. The demand was founded on the receipt of advances from buyers during construction. The Tribunal noted that the issue was prima facie covered by the decision of the Gauhati High Court and by earlier stay orders, which held that amounts received in advance towards sale consideration of flats do not, by themselves, establish provision of taxable service by the builder. Reliance was also placed on the Board circular stating that no service tax liability arises against builders selling flats.

Conclusion: The appellants were held to have a good prima facie case and were granted unconditional dispensation of pre-deposit.

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