AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (3) TMI 694
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....lant and thereafter the possess the flats was to be given to the customers when the entire payment had been made. There were two agreements with each customer - first agreement was between the appellant as the seller and the prospective buyer/ customer as a purchaser for sale of flat, which was to be constructed up to column, beams, roof alongwith brick work. The second agreement was between the appellant and the prospective buyer/customer for the purpose of carrying on the finishing work on the flat - plastering, water supply, sanitary and electric fittings, flooring etc. The appellant engaged contractors for construction and finishing and after completion of the construction and finishing, handed over the flats to the customers. The period of dispute is from December 2005 to October 2006. The department was of the view that the appellant as provider of the construction of residential complex service taxable under Section 65 (105) (ZZZh) was liable to pay service tax on the amount charged by him from the buyers of the flats and accordingly the appellant was required to take service tax registration and pay the service tax. The service tax amounting to Rs. 8,96,303/- was paid by th....
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....tain specifications and certain designs. The prospective buyers were to make payment for the residential units being build by them in instalments and on completion of the residential complex and making full payment for the residential units, the possession of the same was to be handed over to the customers. Here also M/s Raj Homes engaged contractors for construction of the residential complexes. The contractors were paying service tax on the amount being received by them from M/s Raj Homes. The department was of the view that M/s Raj Homes have provided construction of complex service taxable under Section 65 (105) (ZZZh) to their customers - buyers of the flats and as such they were liable to pay service tax on the amount received by them as builders. On persuasion of the Department, M/s Raj Homes took the service tax registration and started paying service tax under protest. However, on the issue of the above-mentioned clarification of the Board vide Circular dated 01/08/06 they on 14/11/06 applied for refund of service tax of Rs. 40,50,000/- paid by them during the period from 16/6/05 to 31/7/06. The refund claim was rejected by the Jurisdictional Deputy Commissioner vide order....
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....Krishna Homes could not be held to have provided the construction of complex service and no service tax could be charged from them on the amount charged by them from their customers for whom the residential units had been constructed in terms of agreements with them, that it is only w.e.f. 01/7/10 that an explanation was added to Section (105) (ZZZh) providing that construction of a new building, which is intended for sale wholly or partly by a builder or any person authorized by the builder, before, during or after construction [except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorized by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being enforce] shall be deemed to be service provided by the builder to the buyer, that explanation to Section 65 (105) (ZZZh) added w.e.f. 01/07/2010 expands the scope of this clause and as such is a prospective amendment and it is only from 01/7/10 that such builders/developers would be liable to pay service tax on the amount received by them from the prospective customers with whom they entered i....
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....they have failed to discharge. Both the DRs also pleaded that notwithstanding the Boards Circular No. 332/35/2006-TRU dated 01/8/06, the agreements of the assessees with their prospective customers for construction of residential units are work contracts in view of judgment of the Apex Court in the case of M/s Larsen & Toubro Limited and others vs. State of Karnataka & others reported in 2013 (TIOL) 46 SC CT LB and hence service tax would be attracted under Section 66 readwith Section 65 (105) (ZZZh) of the Finance Act, 1994 on the amount charged by the assessees from their customers. In this regard, both the DRs drew the attention of the Bench to para 101 of the above-mentioned judgment of the Apex Court, wherein it has been held that when a contract comprises of both a works contract and a transfer of immovable property, such contract does not denude it of its character as works contract, as the term works contract in Article 366 (29A) (b) of the Constitution takes within its fold all genre of works contract and is not restricted to one specie of contract to provide for labour and service alone and that nothing in Article 366 (29A) limits the terms 'works contract'. Both the DRs....
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.... Section 65 (91a). There is also no dispute that both the assessees had engaged contractors for construction of the complexes. The dispute in these appeals is as to whether the assessees would be liable to pay service tax on the amounts charged by them from their customers with whom they had entered into agreements for construction of the residential units and whose possession was to be handed over on completion of the construction and full payment having been made by the customers. It is seen that on this point, the Tax Research Unit of the Central Board of Excise & Customs, which is a wing of the CBEC dealing with legislation work, had vide Circular No. 332/35/2006-TRU dated 01/8/06 clarified that in case where a builder, promoter, developer builds a residential complex having more than 12 residential units by engaging a contractor for construction of such residential complex, the contractor shall be liable to pay service tax on the gross amount charged for the construction service provided to the builder/promoter/developer under construction of complex service falling under Section 65 (105) (ZZZh) of the Finance Act, 1994 and that if no person is engaged by the builder, promoter....
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....a buyer where there is an intended sale between the parties whether before, during or after construction; that the 'Explanation' was specifically legislated upon to expand the concept of taxable service; that prior to the explanation, the view taken was that since a mere agreement to sell does not create any interest in the property and the title to the property continues to remain with the builder, no service was provided to the buyer; that the service, if any, would be in the nature of a service rendered by the builder to himself; that the explanation expands the scope of the taxable service, provided by builders to buyers pursuant to an intended sale of immovable property before, during or after the construction and therefore the provision is expansive of the existing intent and not clarificatory of the same; and is consequently prospective. 9. In view of the above, though in view of the Apex Court judgment in the case of M/s Larsen & Toubro Limited and others vs. State of Karnataka & others (supra), the agreements entered into by a builder/promoter/developer with prospective buyers for construction of residential units in a residential complex against payments being made by ....