Service tax on composite works contracts pre-June 2007 disallowed; post-June 2007 taxable under 'works contract'.

The Tribunal held that the levy of service tax on composite works contracts before June 01, 2007, under 'construction of complex' service was not sustainable. For the period after June 01, 2007, it was determined that demands could not be confirmed under 'construction of complex' service as it would be taxable only under 'works contract'. The Tribunal also clarified that the work undertaken by the appellant did not fall under 'construction of complex' service as the buildings constructed had fewer than twelve residential units. Consequently, the appeal was allowed, and the impugned order was set aside.

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Issues Involved:
1. Levy of Service Tax on composite works contracts before June 01, 2007.
2. Taxability of services under 'construction of complex' after June 01, 2007.
3. Definition and applicability of 'construction of complex' service.

Detailed Analysis:

1. Levy of Service Tax on composite works contracts before June 01, 2007:
The Tribunal examined whether Service Tax could be levied on composite contracts involving the supply of goods/materials during the execution of civil constructions before June 01, 2007. It cited the Supreme Court's decision in Commissioner of Central Excise, Kerala vs. Larsen & Toubro, which clarified that service rendered in a works contract cannot be covered under any other category of service prior to June 01, 2007. The Supreme Court emphasized that the service tax charging section must specifically lay down that the levy of service tax can only be on works contracts and only on the service element derived from the gross amount charged, less the value of property in goods transferred in the execution of the works contract. The Tribunal concluded that the Commissioner (Appeals) erred in observing that prior to June 01, 2007, a composite works contract could be subjected to service tax under 'construction of complex' service. Therefore, the levy of service tax for services provided prior to June 01, 2007, under 'construction of complex' service cannot be sustained.

2. Taxability of services under 'construction of complex' after June 01, 2007:
For the period after June 01, 2007, the Tribunal held that demands could not be confirmed under 'construction of complex' service since it would be taxable only under 'works contract'. The Tribunal referenced a Division Bench judgment in Emaar MGF Construction Private Limited vs. Commissioner of Central Excise, which reiterated that a Composite Works Contract cannot be taxed under 'construction of complex' service as the scope is limited to cover contracts of service simpliciter only.

3. Definition and applicability of 'construction of complex' service:
The Tribunal analyzed whether the work undertaken by the appellant for the Housing Board would be covered under 'construction of complex' service. Section 65(30a) of the Finance Act defines 'construction of complex' as the construction of a new residential complex or a part thereof, among other services. A 'residential complex' is defined under section 65(91a) as a complex comprising a building or buildings having more than twelve residential units. The Tribunal noted that independent buildings having twelve or fewer residential units would not be covered by the definition of 'residential complex'. In this case, the appellant constructed independent buildings with one residential unit each, which does not fall under 'construction of complex' service. This view was supported by previous Tribunal judgments in Macro Marvel Projects Ltd. and A.S. Sikarwar vs. Commissioner of Central Excise, Indore, which clarified that service tax could only be demanded if the building concerned had more than 12 residential units.

Conclusion:
The Tribunal concluded that the levy of service tax on the appellant under 'construction of complex' service cannot be sustained. The impugned order dated October 24, 2013, passed by the Commissioner (Appeals), was set aside, and the appeal was allowed.

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