2025 (1) TMI 1551 - AT - Service Tax

Housing Rehabilitation Project Exempted from Service Tax Under Finance Act Provisions for Tsunami Reconstruction Efforts

M/s. K.B. & Co. Versus The Commissioner of GST & Central Excise,

CESTAT Chennai ruled on service tax applicability for Tsunami housing project. The tribunal determined that constructing over 12 individual residential ... Levy of service tax - Construction of Complex Service - constructing houses for Tsunami-affected people - HELD THAT:- The appellant had constructed individual houses numbering more than 12 houses, which fact has not at all been disputed by the Revenue. The facts therefore are clear inasmuch as the Appellant undertook the construction of individual residential units, which activity was not included within the scope of ‘Construction of Complex Service’ as defined under Section 65(30a) ibid. Reliance placed on the order of Chennai Bench of the Tribunal in the case of Macro Marvel Projects Limited Vs CST Chennai [2008 (9) TMI 80 - CESTAT, CHENNAI] is apt wherein, the Bench held that 'Admittedly, in the present case, the appellant had constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the lawmakers did not want construction of individual residential units to be subject to levy of service tax.' The above ratio squarely applies to the facts of the present case and hence, the demand of service tax in the impugned order cannot sustain for which reason, the same is set aside. Appeal allowed. The Appellate Tribunal (CESTAT Chennai) addressed the issue of whether service tax under 'Construction of Complex Service' as defined in Section 65(30a) of the Finance Act, 1994, was applicable to the appellant's work constructing houses for Tsunami-affected people. The appellant executed contracts for constructing over 12 independent residential houses under the Rajiv Gandhi Rehabilitation Programme, contending that these were individual houses and not a residential complex, thus outside the scope of taxable 'Construction of Complex Service' under Section 65(105)(zzh).The Tribunal relied on the uncontested fact that the appellant constructed individual houses exceeding 12 units but not a residential complex, referencing the precedent in Macro Marvel Projects Limited Vs CST Chennai - 2008 (12) STR 603 (Tri.-Chennai), which held that 'construction of residential complex having not more than 12 residential units is not to be taxed' and that lawmakers did not intend to tax individual residential units.Concluding that the appellant's activity falls outside the taxable ambit, the Tribunal held that 'the demand of service tax in the impugned order cannot sustain' and accordingly set aside the demand, allowing the appeal with consequential benefits.