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of <h1>Tribunal reclassifies construction services for service tax, offers relief to appellant</h1> <h3>M/s. Kishorekumar Gokaldas Developers & Promoters Versus The Commissioner of G.S.T. & Central Excise, Chennai South Commissionerate</h3> The Tribunal allowed the appeals, setting aside the demands for service tax under Construction of Residential Complex Service and Commercial Construction ... Construction services - Construction of Residential Complex Service - Commercial Construction Service - demand of service tax - period March 2006 to June 2010 - Held that:- The issue involved in this case is no more res integra as the same has already been considered and laid to rest by the decision of this very Bench of the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI] wherein it has been held that works contract cannot be taxed prior to 01.06.2007 and in respect of any contract which is a composite contract, service tax cannot be demanded under CICS/CCS for the period after 01.06.2007. The issue being identical, the above ruling squarely applies to the case on hand. Further, no contrary decision was brought to our notice by the Revenue. Appeal allowed - decided in favor of appellant. Issues Involved:1. Demand of service tax under Construction of Residential Complex Service and Commercial Construction Service.2. Applicability of service tax on composite works contracts prior to and after 01.06.2007.3. Classification of services under Commercial or Industrial Construction Service (CICS) and Construction of Complex Service (CCS) versus Works Contract Service (WCS).Detailed Analysis:1. Demand of Service Tax under Construction of Residential Complex Service and Commercial Construction Service:The appellant, engaged in the development of residential and commercial projects, entered into composite contracts with landowners involving the supply and transfer of property in goods during construction. The Department issued two Show Cause Notices demanding service tax for the periods March 2006 to June 2009 and June 2009 to June 2010. The Commissioner of Central Excise & Service Tax, Chennai confirmed these demands, prompting the appellant to file appeals.2. Applicability of Service Tax on Composite Works Contracts Prior to and After 01.06.2007:The appellant argued that their activities constituted 'works contracts,' which were subject to service tax only from 01.06.2007 under Section 65(105)(zzza) of the Finance Act, 1994. They referenced the Tribunal's decision in M/s. Real Value Promoters Pvt. Ltd., which held that works contracts could not be taxed prior to 01.06.2007, and service tax could not be demanded under CICS/CCS for composite contracts even after 01.06.2007. This position was supported by several judicial precedents, including the Supreme Court's ruling in Commissioner of C.Ex. & Cus., Kerala Vs. Larsen & Toubro Ltd.3. Classification of Services under CICS and CCS versus WCS:The Tribunal's analysis confirmed that the construction activities in question were composite works contracts, involving both material supply and service elements. The Tribunal reiterated that such contracts could not be classified under CICS or CCS, as these categories apply only to service simpliciter (pure services without material supply). The Tribunal emphasized that composite works contracts, even after 01.06.2007, should be classified under Works Contract Service (WCS) as defined in Section 65(105)(zzzza). This classification was supported by the Union Finance Minister's 2007 budget speech and CBEC’s Circular 128/10/2010.The Tribunal cited multiple decisions, including those in Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company and Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai, which reinforced that composite works contracts could not be taxed under CICS or CCS. The Tribunal concluded that the demands for service tax under CICS and CCS for periods prior to and after 01.06.2007 were unsustainable.Conclusion:Based on the above analysis, the Tribunal found that the impugned order could not be sustained. The appeals were allowed, and the demands for service tax under CICS and CCS were set aside, with consequential benefits to the appellant as per law. The Tribunal's decision was pronounced in open court.
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