Construction company exempt from pre-deposit of Service Tax for Construction of Complex Services

The Tribunal dispensed with the pre-deposit of Service Tax for a construction company providing "Construction of Complex Services." Relying on legal precedents, including a High Court judgment and relevant circulars, the Tribunal found in favor of the appellants. The decision was announced on 23-8-2011, allowing the appellants' application and relieving them from the pre-deposit requirement.

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Issues:
Prayer to dispense with pre-deposit of Service Tax of Rs. 18,19,099.00 for providing "Construction of Complex Services".

Analysis:
The appellants were engaged in developing and constructing a residential complex with more than twelve units, using their own resources to sell to prospective buyers. However, lower authorities alleged that the construction progressed with advances from buyers, indicating the appellants did not use their own resources entirely. The issue was whether providing construction services to buyers was justified.

At an interim stage, the Tribunal referred to a judgment by the Hon'ble High Court of Gauhati in the case of Magus Construction Pvt. Ltd. v. Union of India, which held that selling residential complexes without providing a separate service does not attract Service Tax, even if advances are received. This view was supported by stay orders in cases like Korath Gulf Links Builders Pvt. Ltd. v. Commr. of Central Excise, Cochin and Ocean Builders v. Commissioner of Central Excise, Mangalore. Additionally, the Tribunal cited Board's Circular No. 108/2/2009-S.T., dated 29-1-2009, to assert that builders selling flats do not incur Service Tax liability.

Based on the above legal precedents and circular, the Tribunal found that the appellants had a strong prima facie case in their favor. Consequently, the Tribunal decided to dispense with the pre-deposit condition of Service Tax and allowed the application in favor of the appellants. The decision was pronounced in open court on 23-8-2011.

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