Construction of independent residential houses is not Construction of Complex Service where no taxable residential complex exists.

Construction of independent residential houses for Tsunami-affected persons was held not to fall within Construction of Complex Service under the Finance Act, 1994. The Tribunal applied the settled distinction between a taxable residential complex and separate individual dwelling units, and found that houses built as distinct units, even under one work order and rehabilitation programme, do not satisfy the statutory character of a complex. The service tax demand was therefore not sustainable and was set aside, with consequential benefits granted as per law.

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Issues: Whether service tax demand under the category of Construction of Complex Service was sustainable where the appellant constructed individual residential houses for Tsunami-affected persons.

Analysis: The dispute related to construction of more than 12 independent houses under a rehabilitation programme. The defining feature of Construction of Complex Service under the Finance Act, 1994 is the construction of a residential complex, whereas construction of individual residential units stands on a different footing. The Tribunal applied the settled view that individual residential houses, even if built under a single work order, do not amount to a taxable residential complex when the activity is confined to separate houses and not a complex having the requisite statutory character.

Conclusion: The demand of service tax under Construction of Complex Service was not sustainable and was set aside. The appeal was allowed with consequential benefits as per law.

Ratio Decidendi: Construction of independent residential houses does not constitute Construction of Complex Service unless the statutory requirements of a taxable residential complex are satisfied.

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