Tribunal rules appellant not liable for service tax on residential complex construction pre/post 01.07.2012

The Tribunal ruled in favor of the appellant, stating they were not liable to pay service tax for 'Construction of Residential Complex Service' for periods before and after 01.07.2012. Additionally, the appellant was found not liable under the Reverse Charge Mechanism. The Tribunal granted the appellant consequential relief as per law.

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Issues involved:
1. Whether the appellant was liable to pay service tax for 'Construction of Residential Complex Service' for the period before and after 01.07.2012.
2. Whether the appellant was liable to pay service tax under the Reverse Charge Mechanism for certain specified services after 01.07.2012.

Detailed Analysis:

1. Construction of Residential Complex Service:
The case involved the appellant engaged in 'Construction Activities' where the revenue alleged that the activities were covered for levy of service tax. The show cause notice demanded service tax under Section 73 of the Finance Act, 1994, for providing 'Construction of Residential Complex Service'. The appellant argued that their activity was not covered by the definition of service tax as they were selling completed residential units, which they believed did not fall under the taxable category. They contended that the transaction was a sale and purchase of immovable property, not a constructional activity. The appellant also cited CBEC circulars to support their claim that no service tax should be levied when flats are sold after completion of construction. The Original Adjudicating Authority confirmed the demand, but the Tribunal held that there was no evidence to establish that the appellant had constructed a residential complex before 30.06.2012 or a complex with more than 2 residential units after 01.07.2012. Consequently, the Tribunal set aside the demand, stating that the appellant was eligible for exemption under Notification No.25/2012-ST for the period after 01.07.2012.

2. Liability of Service Tax under Reverse Charge Mechanism:
The department raised the liability of service tax under the Reverse Charge Mechanism for certain specified services after 01.07.2012. The appellant argued that the service provider was a registered Private Limited Company, which was outside the ambit of the Reverse Charge Mechanism. They also contended that they did not hire any labor contractor in the relevant period, as payments were made directly to daily wage labor. The appellant claimed that the demand under the Reverse Charge Mechanism was devoid of merit as the legal provisions and ingredients of the charging notification were not satisfied. The Tribunal agreed with the appellant's arguments and set aside the demand for service tax under the Reverse Charge Mechanism.

In conclusion, the Tribunal allowed the appeal, stating that the appellant was not liable to pay service tax for 'Construction of Residential Complex Service' for the periods before and after 01.07.2012 and was also not liable under the Reverse Charge Mechanism. The appellant was entitled to consequential relief as per law.

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