High Court rules cooperative housing societies exempt from service tax for construction service without contractor involvement.

The High Court dismissed the revenue's appeal, upholding the tribunal's decision that the construction service provided by a cooperative housing society to its members is not liable for service tax due to the absence of a taxable service provider in transactions where the society constructs residential complexes without engaging a contractor. The court relied on legal precedents and circulars, setting aside the impugned order and allowing the appellant's appeal with consequential relief, if any.

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Issues:
The judgment involves the issue of whether the construction of complex service provided by a cooperative housing society to its members is liable for service tax.

Issue Analysis:
The appeal was filed against the Order-in-Original confirming the demand of service tax under the category of 'Construction of Complex Service'. The appellant argued that due to the mutuality of interest between the cooperative societies and their members, there is no relationship of service provider and service recipient, hence not liable for service tax.

Appellant's Argument:
The appellant's representative highlighted that a previous tribunal order had allowed a refund after considering the merit in detail, and the High Court had upheld this decision. They contended that the service between the cooperative housing society and its members is not liable for service tax based on legal precedents.

Revenue's Response:
The Assistant Commissioner representing the revenue reiterated the findings of the impugned order, maintaining the position that the service is liable for service tax.

Tribunal's Decision:
The tribunal examined the submissions and records, emphasizing that in cases where the cooperative societies construct residential complexes without engaging a contractor, the transaction is between the society and its members, not involving a taxable service provider. Citing relevant circulars, the tribunal concluded that in the absence of a contractor and considering the nature of the transaction, the service in this case cannot be considered taxable.

High Court's Decision:
The High Court dismissed the revenue's appeal, noting that the issue was substantially covered by a previous decision involving a developer. The court declined to apply a later explanation retroactively, leading to the dismissal of the tax appeal.

Final Judgment:
Based on the settled legal position and previous orders, the tribunal set aside the impugned order, allowing the appeal with consequential relief if any, in accordance with the law. The judgment in favor of the appellant was pronounced in the open court on 24.03.2023.

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