Service tax on construction and renting disputes failed as composite works, limitation, and ownership issues defeated the demands.

Construction for police housing, tsunami rehabilitation houses, hospitals and municipal works was held not liable to service tax under commercial or industrial construction service or construction of complex service, because the police quarters were already covered by prior decisions, the tsunami work involved individual houses rather than a residential complex, and the hospital and municipal works were composite works contract activity not sustainable under the invoked service categories. The extended limitation period was also rejected because the record showed no wilful suppression, fraud or misstatement with intent to evade tax. The renting of immovable property demand against the individual appellant likewise failed, as the ownership plea was uncontroverted and the demand was time-barred on the facts.

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Issues: (i) whether the construction activities undertaken for Tamil Nadu Police Housing Corporation, Tsunami District Implementation Unit and Peoples Development Association, as well as the constructions for hospitals and Madurai Municipal Corporation, were taxable under commercial or industrial construction service or construction of complex service; (ii) whether the demand could be sustained by invoking the extended period of limitation; and (iii) whether the renting of immovable property demand against the individual appellant was maintainable.

Issue (i): whether the construction activities undertaken for Tamil Nadu Police Housing Corporation, Tsunami District Implementation Unit and Peoples Development Association, as well as the constructions for hospitals and Madurai Municipal Corporation, were taxable under commercial or industrial construction service or construction of complex service.

Analysis: The construction of police quarters for Tamil Nadu Police Housing Corporation was held to be outside the tax net following prior Tribunal and appellate decisions on identical facts. The works undertaken for Tsunami affected persons were individual houses, not a residential complex, and therefore did not satisfy the statutory definition requiring a building or buildings with more than twelve residential units. As to the hospital and municipal works, the record showed composite construction activity involving supply of goods and services, and the demand was framed under service categories that could not survive after the law on works contract service as laid down by the Supreme Court. The Department also failed to establish that the municipal work was a commercial structure used for profit.

Conclusion: The construction services were not liable to service tax and the demands on that count were set aside.

Issue (ii): whether the demand could be sustained by invoking the extended period of limitation.

Analysis: The show cause notice and record did not disclose any positive act of wilful suppression, misstatement or fraud with intent to evade tax. The appellants had disclosed the nature of the work, relied on exemption based contentions, and the liability itself rested on a debatable tax classification. In the absence of deliberate suppression, the extended limitation was not available to the Department.

Conclusion: Invocation of the extended period of limitation was unsustainable.

Issue (iii): whether the renting of immovable property demand against the individual appellant was maintainable.

Analysis: The appellant's claim that the property belonged to his wife and that he merely received rent remained uncontroverted. In any event, the levy on renting of immovable property was involved in interpretational dispute and retrospective expansion, and the demand was time-barred on the facts of the case.

Conclusion: The demand against the individual appellant on renting of immovable property could not be sustained.

Final Conclusion: The impugned orders were held unsustainable in entirety on the contested demands, and the appeals succeeded with consequential relief under law.

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