Service tax on builders for residential complex construction was not leviable before 01.07.2010 under the amended service definition.

Service tax on a builder or developer for construction of a residential complex was held not leviable for the period before 01.07.2010 under Construction of Residential Complex service. The amended definition, including the inserted explanation effective from 01.07.2010, was treated as bringing builders and developers within the tax net only from that date. Board circulars were relied on to clarify that no service tax was payable for the earlier period, and the demand for that period was therefore unsustainable.

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Issues: Whether service tax was leviable on a builder or developer for construction of a residential complex prior to 01.07.2010 under the head of Construction of Residential Complex service.

Analysis: The demand was examined in the light of the amendment to the definition of Construction of Residential Complex service, by which the explanation was inserted with effect from 01.07.2010. The Board Circulars clarified that builders or developers were brought within the service tax net only from that date and that no service tax was payable for the period prior thereto. The circulars were treated as governing the controversy and the demand for the earlier period was therefore not sustainable.

Conclusion: The demand of service tax for the period prior to 01.07.2010 was held to be not leviable, and the appeal was allowed in favour of the assessee.

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