Developer not liable for service tax on construction of complex service before June 2007

CESTAT Bangalore allowed the appeal concerning service tax liability on construction of complex service for January 2006 to September 2010. The tribunal held that appellant-developer, who constructed residential blocks and sold flats through composite contracts involving materials and services, was not liable for service tax on construction of complex service prior to June 1, 2007, following SC precedent in Larsen Toubro case. For the period June 2007 to September 2010, appellant had already discharged service tax under works contract service category. The impugned order was set aside.

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Issues involved: Determination of liability to discharge service tax under the category of 'construction of complex service' for the period January 2006 to September 2010.

Facts and Arguments by Appellant: The appellant engaged in providing taxable services as an 'Advertising Agency' and 'Works Contract Services'. The appellant, as a developer, entered into a Development Agreement with a landowner to construct residential blocks. Various contractors rendered construction services, and service tax was paid under the 'works contract service' category from June 2007 to September 2010. The appellant contended that prior to June 2007, service tax on works contract service was not leviable as per relevant judgments and circulars. The appellant maintained that all facts were communicated to the department, and there was no suppression of facts.

Revenue's Position: The Revenue reiterated the findings of the Commissioner regarding the liability of the appellant.

Judgment: The Tribunal analyzed the facts and legal provisions. It was established that prior to June 2007, service tax on 'construction of complex service' was not leviable for composite contracts resembling 'works contract service'. From June 2007 to September 2010, the appellant discharged service tax under 'works contract service'. Referring to relevant judgments and circulars, the Tribunal concluded that service tax was not applicable on 'construction of complex service' before June 2007 and that the appellant had appropriately paid under 'works contract service' for the subsequent period. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per law.

Separate Judgment: No separate judgment was delivered by the judges in this case.

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