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of <h1>CESTAT Bangalore rules on service tax demand for construction services, imposes penalties under Finance Act, 1994</h1> <h3>ALURISUBBARAJU & CO. Versus COMMR. OF CUS. & C. EX., VISAKHAPATNAM-II</h3> The Appellate Tribunal CESTAT BANGALORE addressed the demand of service tax totaling Rs. 88,47,240 for various construction services provided by the ... Waiver of pre deposit - Construction service - Held that:- Definition of construction of commercial complex service would mean that residential units should not have been sold but given on rent or given without consideration. In this case admittedly, the apartments/housing units were sold by the Andhra Pradesh Government under the scheme and therefore it has to be held that residential complex was constructed by the appellants and handed over to the implementing agency of the Rajiv Gruhakalpa Scheme which in turn sold the apartments to the beneficiaries. Therefore, it has to be held that appellants have rendered construction of residential complex service. - Partial stay granted. Issues:1. Demand of service tax for various construction services provided by the appellant.2. Consideration of demands relating to the period before 1-6-2007.3. Classification of construction services as commercial or industrial construction service and residential complex service.4. Prima facie analysis leading to the direction for pre-deposit by the appellant.Analysis:1. The judgment addresses the demand of service tax amounting to Rs. 88,47,240 for services including commercial or industrial construction, residential complex construction, site formation, and maintenance services provided by the appellant from 1-10-2004 to 31-3-2009. Penalties under the Finance Act, 1994 have also been imposed on the appellant.2. The Tribunal acknowledges that certain services provided by the appellant, such as construction for various entities, fall under the category of commercial or industrial construction. However, the issue of demands related to the period before 1-6-2007 is pending before a 5 Member Bench of the Tribunal. Therefore, the decision regarding the waiver of pre-deposit for demands before this date is deferred.3. Regarding the subsequent period, a demand of around Rs. 35 lakhs is in question. This demand arises from the construction of low-income housing units, categorized as residential complex services. The appellant argued that the housing units were sold under a government scheme for underprivileged populations, and therefore should not be considered commercial. However, the Tribunal found that the construction of these residential units and their subsequent sale constituted the provision of residential complex services by the appellant.4. Based on the prima facie analysis, the Tribunal directs the appellant to pre-deposit Rs. 30 lakhs, considering a credit of Rs. 10 lakhs already paid. The appellant is required to comply within eight weeks from the date of the order. Failure to comply will result in the dissolution of the stay granted, allowing the Revenue to realize the entire adjudicated liability as per the law.This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT BANGALORE, providing a comprehensive understanding of the decision and its implications for the appellant.
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