Cooperative society exempt from service tax for construction services to members.

The High Court upheld the Tribunal's decision that a cooperative society providing construction services to its members, without engaging a contractor, does not render a taxable service. The Court dismissed the Tax Appeal, ruling that the service tax demand on the cooperative society is not applicable due to the nature of the transaction being between the society and its members. The appeal was allowed, setting aside the order demanding service tax from the cooperative housing society.

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Issues involved:
The appeal challenges the demand of service tax on the category of 'Construction of Complex Service' imposed by the adjudicating authority, Commissioner, Service Tax, Ahmedabad, on the cooperative society providing construction services to its members.

Summary:
The appellant contended that the service provided by cooperative societies to its members, involving mutuality of interest, does not establish a relationship of service provider and service recipient, hence not liable for service tax. The appellant relied on a previous case involving similar facts where the Tribunal allowed the refund, indicating that the service between cooperative housing societies and its members is not taxable.

Upon considering the submissions, the Tribunal referred to previous decisions and circulars to determine that in cases where a cooperative society constructs residential complexes without engaging a contractor, the transaction is between the society and its members, not constituting a taxable service. The Tribunal emphasized that in the absence of a contractor, the nature of the transaction does not attract service tax.

The Hon'ble High Court of Gujarat upheld the Tribunal's decision, stating that the explanation regarding construction of a complex intended for sale does not apply retrospectively to past events. The Court dismissed the Tax Appeal, affirming that no question of law arises in the case.

In light of the settled legal position established by the Tribunal and upheld by the High Court, the impugned order demanding service tax from the cooperative housing society is set aside, and the appeal is allowed with any consequential relief according to the law.

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