Government construction for residential purposes for the poor exempt from service tax under "personal use" definition. Precedents cited.

The Tribunal ruled that construction activities under government schemes like JnNURM and Safai Kamdar for residential purposes aimed at the poor are excluded from service tax liability as they fall under the definition of "personal use." Citing precedents such as Khurana Engineering Limited, DH Patel, and Natvar Construction Co., the Tribunal held that such constructions do not attract service tax. Consequently, the order demanding service tax was set aside, and the appeal was allowed with consequential relief.

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Issues Involved:
1. Liability to pay service tax under the category of Construction of Complex service for construction of houses under JnNURM and for Safai Kamdar for Ahmedabad Municipal Corporation.

Summary:

Issue 1: Liability to Pay Service Tax for Construction under JnNURM and Safai Kamdar Schemes

The appellant contested the liability to pay service tax under the category of Construction of Complex service for constructing houses under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) and for Safai Kamdar for the Ahmedabad Municipal Corporation. The appellant relied on various judgments which held that such construction activities are not liable for service tax.

The Tribunal examined the relevant legal provisions, specifically Section 65(91a) of the Finance Act, 1994, which defines "residential complex." The Tribunal noted that the construction of residential complexes intended for personal use, including use by another person on rent or without consideration, is excluded from the definition and thus from taxability.

In the case of Khurana Engineering Limited, the Tribunal had previously ruled that construction activities under JnNURM for urban poor people amounted to "personal use" and were not subject to service tax. Similar judgments in the cases of DH Patel and Natvar Construction Co. reinforced this position, confirming that construction for government schemes like JnNURM and Rajiv Awaas Yojana are not taxable.

The Tribunal concluded that the construction activities in question, being for residential use under government schemes aimed at the poor, fall under the exclusion for personal use. Therefore, the impugned order demanding service tax was set aside, and the appeal was allowed with consequential relief.

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