Residential complex service exclusion applies to employee quarters built for rent, so the service tax demand could not stand.

Construction of residential quarters for government organisations and public authorities was held not to fall within taxable residential complex service where the units were intended for use by employees on rent. The Tribunal applied the exclusion for residential use, including occupation by another person on rent or without consideration, and followed an earlier ruling on similar facts. It also noted that, in a demand case, Revenue had to show that the units were not meant for personal use, but no such evidence was produced. The service tax demand was therefore not sustainable.

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Issues: Whether construction of residential quarters for government organisations and public authorities, intended for use by their employees and for rent, fell within the definition of residential complex service and attracted service tax.

Analysis: The decisive factor was the ultimate use of the constructed units. The law excludes from the definition of residential complex those units intended for personal use, including use as residence by another person on rent or without consideration. The Tribunal applied the earlier ruling on similar facts and held that where quarters are constructed to be given on rent to employees, the activity does not fall within taxable residential complex service. In a demand case, the burden also lay on Revenue to establish that the units were not meant for personal use, and no such evidence was produced.

Conclusion: The construction activity was not taxable as residential complex service, and the demand could not be sustained.

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