Retrospective service tax exemption rejected for residential housing construction; refund claim for the pre-exemption period failed.

Construction of residential flats for BPL families for Haryana Housing Board was treated as construction of residential complex service and remained taxable under the pre-01.07.2012 service tax regime. The exemption in Entry 12 of Mega Exemption Notification No. 25/2012-ST took effect only from 01.07.2012 and could not be applied retrospectively to the earlier period. As the refund claim rested solely on that later exemption, it was not maintainable for service tax paid for 2009-10 to June 2012.

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Issues: (i) Whether construction of residential flats for BPL families for Haryana Housing Board was a taxable service prior to 01.07.2012 and whether the refund claim of service tax paid for the period 2009-10 to June 2012 was maintainable.

Analysis: The relevant activity was treated as construction of residential complex service and was subject to service tax under the statutory regime prevailing during the period in dispute. The exemption relied upon by the appellant flowed from Entry No. 12 of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012, which operated from 01.07.2012. The reasoning accepted below was that the exemption could not govern a period earlier than its commencement, and the reliance on authorities dealing with commercial or industrial construction did not assist the appellant because the present dispute concerned construction of residential houses for BPL families.

Conclusion: The activity was taxable for the period prior to 01.07.2012, and the refund claim was not maintainable. The appeal was therefore without merit.

Ratio Decidendi: An exemption introduced with effect from a specified date does not retrospectively negate service tax liability already incurred for an earlier period, and a refund claim based solely on such later exemption cannot succeed for the pre-exemption period.

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