Works contract treatment and public-purpose exemption kept housing board residential construction outside service tax.

Construction of residential units for a housing board was treated as a composite works contract rather than construction of complex service for the earlier period, so service tax was not leviable on that basis. For the later period, exemption under Notification No. 25/2012-S.T. applied because the recipient was a governmental authority and the activity concerned construction of residential houses falling within exempt original works for public purpose. The construction activity was therefore not exigible to service tax for the impugned period, with consequential relief granted.

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Issues: Whether the construction of residential units for Haryana Housing Board was taxable as construction of complex service or was covered as works contract service and exempt for the relevant periods.

Analysis: The dispute was held to be covered by earlier decisions dealing with the pre-negative list and post-negative list periods. For the earlier period, works contract involving supply of material and labour was treated as taxable only from 1-6-2007, and composite works contract service was not assessable under construction of complex service. For the later period, the exemption under Notification No. 25/2012-S.T. was applied because the recipient was a governmental authority, the activity was construction of residential houses, and the service fell within the exempted category of original works for public purpose.

Conclusion: The construction activity was not exigible to service tax for the impugned period, and the appeal was allowed with consequential relief.

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