2024 (4) TMI 331 - AT - Service Tax

Service tax refund granted for construction of four residential units under twelve-unit threshold requirement

M/s. Sandeep N Savani Versus Commissioner of GST & Central Excise Chennai South Commissionerate

CESTAT Chennai allowed the appeal regarding service tax refund for construction of residential complex. The appellant constructed only four residential ... Refund of Service tax paid - construction of residential complex/apartment - it is the case of the revenue that plan approval having been obtained on 04.03.2013 and the construction activity having been commenced from 31.06.2013, explanation inserted to tax works contract service with effect from 01.07.2010 was very much applicable to the case of the appellant - HELD THAT:- There is no dispute that only four residential units / flats were constructed in this case on hand and hence, by virtue of this alone the case of the appellant does not get covered under the definition of residential units since the definition covers any complex of a building or buildings, having more than twelve residential units. Secondly, going by the ruling of the coordinate Hyderabad Bench in VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [2018 (5) TMI 889 - CESTAT HYDERABAD], it is held there was no tax liability on the appellant for the impugned flats constructed prior to 01.07.2010, having less than 12 units / flats and hence, the refund claimed by the appellant was very much in order; the revenue has erred in rejecting the valid refund claim and consequently, the impugned order cannot sustain. The impugned order is set aside - appeal allowed. Issues Involved:1. Whether the rejection of the refund application by the revenue is in order.Summary:The appeal was filed against the Order in Appeal No. 274/2019 (CTA - II) dated 25.9.2019 by the Commissioner of Central Tax (Appeals - II), Chennai.Issue 1: Rejection of Refund ApplicationThe appellant, a landowner, entered into a development agreement on 02.05.2008 with a developer for constructing a residential complex/apartment and paid Rs. . 29,31,752 towards service tax. Believing there was no tax liability, the appellant filed a refund application, which led to a show cause notice and subsequent rejection by the adjudicating authority per Order in Original No. 03/2019 (RF/RB)-Legacy dated 14.6.2019. The original authority held that the service tax was correctly paid towards works contract service.Aggrieved, the appellant appealed to the first appellate authority, which upheld the rejection, stating that the appellant was a service recipient and the service was provided after 01.07.2012, aligning with the point of taxation rules, 2011. The FAA noted the service tax was paid at the applicable rate of service contract and dismissed the argument that the construction fell under residential complex service due to the number of units being less than 12.The appellant argued that the development agreement dated 02.05.2008 predated the explanation inserted to tax works contract service effective from 01.07.2010. They cited Notification No. 36/2010-ST dated 28.06.2010 and Circular No. 151/2/2012-ST dated 10.2.2012, which exempted tax liability on amounts received before 01.07.2010 for services provided after that date. They also contended that the construction was for personal use and thus excluded from service tax u/s 65(91)(a) of the Finance Act, 1994.In support, the appellant referenced several CESTAT orders, including Ramaniyam Real Estates Pvt. Ltd. Vs. Commissioner of Service Tax, Chennai, and Vasantha Green Projects Vs. Commissioner of Central Tax, which held that there was no service tax liability for construction services provided before 01.07.2010.Upon review, the Tribunal found that only four residential units were constructed, not meeting the definition of a residential complex (which requires more than 12 units). Additionally, the Tribunal agreed with the appellant that there was no tax liability for the units constructed prior to 01.07.2010. Consequently, the Tribunal concluded that the refund claim was valid, setting aside the impugned order and allowing the appeal with consequential benefits as per law.(Order pronounced in open court on 08.04.2024)