Tribunal rules construction services for urban poor exempt from service tax

The Tribunal ruled in favor of the appellant, holding that the services provided for the construction of residential complexes for urban poor under the Jawaharlal Nehru National Urban Renewal Mission to Surat Municipal Corporation are exempt from service tax. Citing legal precedents, the Tribunal determined that such constructions qualify as "personal use" and fall outside the scope of taxable services. Consequently, the demand for service tax on the appellant was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal with consequential relief.

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Issues Involved:
1. Liability of the appellant to pay service tax under the category of "Construction of Residential Complex" provided to Surat Municipal Corporation under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM).

Summary:

1. Liability of Service Tax on Construction Services Provided to Surat Municipal Corporation:
The core issue was whether the appellant is liable to pay service tax for services provided under the "Construction of Residential Complex" to Surat Municipal Corporation under JnNURM. The appellant argued that this issue has already been settled in favor of the assessee in previous judgments, notably in the cases of Natvar Construction Co. and Khurana Engineering Limited.

2. Previous Judgments and Legal Precedents:
The Tribunal examined previous judgments, including:
- Jethanand Arjundas & Sons: It was held that constructing houses for slum people under government schemes is not taxable under Construction of Complex Services as it is intended for personal use.
- Khurana Engineering Limited: The Tribunal clarified that residential complexes intended for personal use, including those constructed for urban poor under government schemes, are not taxable.
- Santosh Katiyar vs. Commissioner of Central Excise, Bhopal: The Tribunal noted that services provided under JnNURM are exempt from service tax as per Notification No. 28/2010-S.T.

3. Application of Legal Principles:
The Tribunal found that the services provided to Surat Municipal Corporation under JnNURM are similar to those in the cited cases. The construction of residential complexes for urban poor amounts to "personal use" and is thus exempt from service tax. The Tribunal reiterated that the definition of "residential complex" under Section 65(91a) of the Finance Act excludes complexes intended for personal use.

4. Conclusion and Order:
Based on the legal precedents and detailed analysis, the Tribunal concluded that the demand for service tax on the appellant for the services provided under JnNURM is not sustainable. The impugned order was set aside, and the appeal was allowed with consequential relief.

Final Pronouncement:
The judgment was pronounced in the open court on 28.06.2023, setting aside the impugned order and allowing the appeal in favor of the appellant.

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