Builder wins appeal against Service Tax demand for construction of residential complexes pre-01.07.2010

The appellant, a builder, challenged a demand for Service Tax for construction of complex services. The appellate authority ruled that no Service Tax could be imposed on construction of residential complexes before 01.07.2010, regardless of the nature of the service. As the period in question predated this date, the demand was deemed unsustainable, and the order confirming it was set aside. The appeal was allowed with any consequential benefits as per law.

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Issues:
The issue involved is whether the authority was justified in demanding Service Tax from the appellant under construction of complex service for the period from 16.06.2005 to March 2010.

The appellant, a builder, undertook construction of various residential projects and was alleged to have rendered construction of complex services, leading to a demand for Service Tax. The Commissioner confirmed the demand in the Order-in-Original, prompting the appellant to appeal.

The appellant contended that the taxability under construction of complex services (CCS) or works contract service (WCS) had been settled by previous CESTAT decisions following the Supreme Court's ruling in a specific case. Reference was made to a Hyderabad Bench decision outlining the taxability of construction of residential complexes before and after specific dates.

After considering various CESTAT decisions, including the Hyderabad Bench ruling, it was held that no Service Tax could be levied on construction of residential complexes before 01.07.2010, regardless of whether the service was rendered as service simpliciter or as a works contract. As the period in question fell before this date, the demand for Service Tax was deemed unsustainable, and the impugned order was set aside.

The appeal was allowed with consequential benefits, if any, as per law.

(Order pronounced in the open court on 06.04.2023)

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