Tribunal Upholds Decision on Non-Taxability of Construction Activities for Residential Complex

The Tribunal upheld the Commissioner (Appeals)'s decision regarding the non-taxability of construction activities for a residential complex service. The appellant's appeal against a service tax demand was allowed as the construction services were considered to be on the appellant's own properties and not provided to another person under Section 65(105)(zzzh) of the Finance Act, 1994. The Tribunal relied on the Bombay High Court's interpretation that prior to the introduction of the Explanation in 2010, constructions for subsequent sale did not attract service tax. The revenue's appeal was dismissed, and no costs were awarded.

---

---

Issues:
1. Appeal against order of the Commissioner (Appeals) regarding service tax demand for construction of residential complex service.
2. Interpretation of Section 65(105)(zzzh) of the Finance Act, 1994.
3. Impact of the Explanation introduced in Section 65(105)(zzzh) by the Finance Act, 2010.
4. Analysis of the scope of the Explanation in light of the decision of the Bombay High Court.
5. Dismissal of the revenue's appeal.

Analysis:
The judgment deals with an appeal against the order of the Commissioner (Appeals) regarding service tax demand for construction of a residential complex service. The primary authority had confirmed a service tax demand on the appellant for providing construction services without obtaining registration, filing returns, or remitting service tax on advances received for the sale of residential apartments. The Commissioner (Appeals) allowed the appellant's appeal, stating that since the appellant was constructing on its own properties and selling residential units to third parties, the construction of complex services cannot be considered as provided to another person under Section 65(105)(zzzh) of the Finance Act, 1994.

The Commissioner (Appeals) relied on Board Circulars and concluded that the appellant's activities were not taxable under the relevant provisions. However, Section 65(105)(zzzh) was later amended by the Finance Act, 2010, introducing an Explanation. The Explanation deemed construction of a complex intended for sale by a builder to be a service provided to the buyer. The Bombay High Court, in a separate case, interpreted this Explanation as prospective and held that prior to its introduction, constructions on one's own properties for subsequent sale would not attract service tax.

Given the Bombay High Court's decision and the lack of contrary decisions, the Tribunal found the Commissioner (Appeals)'s order to be correct and dismissed the revenue's appeal. The Tribunal deemed the revenue's appeal to be without merit and upheld the decision of the Commissioner (Appeals) regarding the non-taxability of the appellant's construction activities. No costs were awarded in this case.

---