Waiver granted for pre-deposit in appeal, relief for developer in tax dispute.

The tribunal granted a waiver of pre-deposit for the remaining dues and stayed the recovery pending the appeal's decision, providing relief to the appellant, a developer engaged in constructing residential complexes. The appellant's argument regarding the applicability of CBEC Circular on tax liability was considered, and the tribunal found the payment made towards service tax sufficient as a pre-deposit for the appeal hearing, given that a significant portion of the work was completed before the imposition of service tax on 'works contract.'

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Issues:
1. Liability of service tax on construction of residential complex services.
2. Applicability of CBEC Circular on tax liability.
3. Pre-deposit waiver and stay on recovery of dues pending appeal.

Analysis:
1. The appellant, a developer engaged in constructing residential complexes, was found liable for service tax amounting to Rs. 2,03,24,226 for the period from 16-6-2005 to 31-12-2006. The liabilities confirmed included service tax, interest, and various penalties under different sections of the Finance Act, 1994. The appellant failed to follow statutory formalities, leading to the imposition of these liabilities.

2. The appellant argued for waiver of pre-deposit and stay on recovery, contending that the work was done before service tax on 'works contract' was imposed. Referring to CBEC Circular No. 108/02/2009-S.T., the appellant claimed that builders/developers constructing residential flats were not providers of 'Construction of Residential Complex' service. Additionally, the appellant highlighted that a significant portion of the work was completed before 15-6-2005 and had already paid 83% of the total liability.

3. The respondent, however, countered that the CBEC Circular did not cover the activity in question as the developer had a joint venture agreement with the landowner, and the construction was part of the consideration for the land received. The respondent argued that the impugned activity fell under the 'Construction of Residential Complex' category, justifying the tax liabilities imposed.

4. After considering both sides' arguments, the tribunal acknowledged that the appellant had already paid 83% of the total liability and that 15% of the work was completed before 15-6-2005. Consequently, the tribunal deemed the payment made towards service tax sufficient as a pre-deposit for the appeal hearing. As a result, the tribunal granted a waiver of pre-deposit for the remaining dues and stayed the recovery pending the appeal's decision, providing relief to the appellant.

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