2019 (5) TMI 1764 - AT - Service Tax

Appellate Tribunal rules in favor of M/s Grishma Enterprises, exempting Service Tax on pre-2010 construction services.

Messrs Grishma Enterprises Versus C.C.E. & S.T., Rajkot         

The Appellate Tribunal CESTAT, Ahmedabad allowed the appeal by M/s Grishma Enterprises, ruling that Service Tax could not be levied on services related to ... Levy of Service Tax - Commercial and Industrial Construction service - appellants are receiving advances in respect of sale of property, prior to 01/072010 - HELD THAT:- Identical case decided in the case of Sun Builders [1772520] where it was held that Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65(105)(zzzh) w.e.f. 1-7-2010, and therefore, it has to be held that such contracts were not covered by Section 65(105)(zzzh) during the period prior to 1-7-2010. In the instant case, the period involved for demanding is from 2004-2005 to 2007-2008 which is prior to the amendment made in the Finance Act, 2010 with effect from 01/07/2010 - demand do not sustain - appeal allowed - decided in favor of appellant. Issues involved:1. Whether Service Tax can be levied on services under the head of Commercial and Industrial Construction when advances were received prior to 01/07/2010.Analysis:The Appellate Tribunal CESTAT, Ahmedabad heard an appeal filed by M/s Grishma Enterprises against the demand of Service Tax, interest, and penalty. The main issue in question was whether Service Tax could be imposed on services related to Commercial and Industrial Construction when advances for construction were received before 01/07/2010. The appellant's counsel argued that the taxation of construction services under the head of Commercial or Industrial Construction only became effective from 01/07/2010 due to an amendment by the Finance Act, 2010. The counsel cited a similar case involving Sun Builders to support their argument.The respondent's representative relied on the impugned order during the proceedings. After considering the arguments from both sides, the Tribunal referred to a previous case involving Krishna Homes and a judgment by the Hon'ble Apex Court in the case of Larsen & Toubro Limited & Ors vs. State of Karnataka & Ors. The Tribunal concluded that prior to 01/07/2010, there was no intention by the Government to tax works contracts involving transfer of immovable property in the context of construction of residential units in a residential complex. Therefore, such contracts were not covered by the relevant section during that period.Given that the entire period relevant to the appeal was before 01/07/2010, the Tribunal followed the precedent set by the case of Krishna Homes and set aside the impugned order, ultimately allowing the appeal. The demand for Service Tax from 2004-2005 to 2007-2008, which was prior to the amendment in the Finance Act, 2010, was deemed unsustainable. Consequently, the appeal was allowed, and the demand for Service Tax was dismissed for the period in question.