Construction development works classified as Works Contract Service not Construction of Residential Complex Service under Section 65A

CESTAT Hyderabad held that construction/development works in four ventures should be classified under Works Contract Service (WCS) rather than Construction of Residential Complex Service (CRCS) post 01.06.2007, following SC precedent in Commissioner v. Larsen Toubro. For pre-01.06.2007 period, no WCS classification existed, making demand unsustainable. Post-01.06.2007, WCS was more specific classification under Section 65A. Despite WCS classification, no service tax liability existed for period prior to 01.07.2010 per Board Circular 151/2/2012-ST and tribunal precedent. Revenue's appeal dismissed.

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Issues involved:
The judgment involves issues related to the classification of services under 'Construction of Residential Complex Service' (CRCS) and 'Works Contract Service' (WCS), as well as the applicability of Board Circulars and case laws in determining the correct tax liability.

Classification under CRCS and WCS:
The main issue in the case was determining whether the services provided by the Respondent fell under CRCS or WCS during the relevant period. The Revenue contended that post judgment in a specific case, CRCS would not be the appropriate classification, and the services should be classified as WCS. The Commissioner examined the classification under Sec 65A and found that the services were more appropriately classified under CRCS rather than WCS. However, the Tribunal disagreed with the Commissioner's interpretation and held that the services were rightly covered under WCS post 01.06.2007, leading to the dismissal of the Appeal by Revenue.

Change in classification post 01.06.2007:
Another issue raised was whether the department could change the classification from CRCS to WCS post 01.06.2007. The Tribunal noted that there was no change in the nature of services provided, but a new category of service, WCS, was introduced. The Tribunal held that there was no bar in changing the classification, especially when the service could be more appropriately classified under a different category post the introduction of the levy.

Exemption under Circular No. 151/2/2012-ST:
The final issue addressed was whether the services classified under WCS post 01.06.2007 would be entitled to exemption under Circular No. 151/2/2012-ST. The Revenue argued that the exemption did not apply to WCS. However, the Tribunal referred to precedent orders and held that no tax was payable for services classified under WCS for the period prior to 01.07.2010. Consequently, the Appeal by Revenue was dismissed.

Conclusion:
The Tribunal dismissed the Appeal by Revenue, upholding the classification of services under Works Contract Service (WCS) post 01.06.2007 and affirming the entitlement to exemption under Circular No. 151/2/2012-ST for the relevant period.

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