Service Tax Not Applicable on Pre-2010 Residential Construction; Post-2010 Misclassified Under Works Contract Service.

The CESTAT Hyderabad ruled that the appellant is not liable for service tax on the construction of residential flats for the period before July 1, 2010, based on Circular No.151/2/2010-ST. For the period after July 1, 2010, the Tribunal determined that the service tax was incorrectly demanded under "Construction of residential complex service" and should have been classified under "Works Contract service." The Tribunal allowed the appeal, set aside the Impugned Order, and granted the appellant consequential benefits according to the law.

---

---

Issue: whether service tax is payable for construction of residential flats for April 2010-March 2011. Relevant law: Sec. 65(105)(zzzza) (Works Contract service), which from 01.06.2007 includes "construction of residential complex or a part thereof." Reliance placed on Larsen & Toubro Ltd and Tribunal precedents (Sai Teja Constructions; Pragati Edifice). Findings: For the period prior to 01.07.2010, service tax is not chargeable for construction of residential property/flats as clarified by Board Circular No.151/2/2010-ST. For the period 01.07.2010-31.03.2011, the demand was incorrectly classified under "Construction of residential complex" service. Correct classification is "Works Contract service" under Sec. 65(105)(zzzza), following the cited Supreme Court and Tribunal precedents. Result: Impugned Order set aside; appellant entitled to consequential benefits in accordance with law.

---