TaxTMI 
TaxTMI 
2018 (7) TMI 1135
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....ed in coming to the conclusion that the "Residential Complex" constructed by the assessee falls within the meaning of "personal use" under Sec.65(91a) of the Finance Act, 1994 and therefore not liable to pay service tax? 2. Whether the Tribunal erred in coming to the conclusion that the activity of the assessee is covered by Circular dated 24-05- 2010 issued by CBEC and therefore not liable to pay service tax? 3. Whether the Tribunal erred in coming to the conclusion that the demands made in Show Cause Notice dated 08-07-2009 do not fall within the extended period of limitation prescribed under Sec.73(1) of the Finance Act, 1994?" 3. The learned Tribunal, Customs, Excise & Service Tax Appellate Tribunal (CSTAT) by its impugned Order dated 16/07/2015 held in favour of the Respondent - Assessee M/s. Nithesh Estates Limited while allowing the appeal filed by the Respondent Assessee M/s. Nithesh Estates Limited that the Respondent Assessee was not liable to pay any Service Tax on the said construction activity as the said construction activity fell within the Exclusion Clause of the definition of 'Residential Complex' as defined in Section 65(91a) of the Finance Act, 1994. The....
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....uilt are intended for the personal use of the GOI which includes promoting the use of complex as residence by other persons (i.e. the Government officers or the Ministers). As such the GOI is the service receiver and NBCC is providing services directly to the GOI for its personal use. Therefore, as for the instant arrangement between Ministry of Urban Development and NBCC is concerned, the Service Tax is not leviable. It may, however, be pointed out that if the NBCC, being a party to a direct contract with GOI, engages a sub- contractor for carrying out the whole or part of the construction, then the sub- contractor would be liable to pay Service Tax as in that case, NBCC would be the service receiver and the construction would not be for their personal use." It can be seen that if the land owner enters into a contract with a promoter/builder/ developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. It is quite clear that CBE&C also has clarified that in cases like this, service tax need not be paid by the builder/developer who has constructed the complex. If t....
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.... by the Developer (M/s. Nithesh Estates Limited) to Larsen & Toubro Limited would be to the extent of Rs. 49,96,21,093/- under the following three heads:- 1. Civil structural & Architectural work : Rs.34, 85,54, 394/- 2. NSC Provisional sum : Rs.13, 73,33,362/- 3. Coordination fee @10% on NSC Scope: Rs.1,37,33,336/- (Provisional) Total: Rs.49,96,21,093/- 5. The learned counsel for the Revenue also drew our attention towards certain other Clauses of the said Contract between the parties, M/s. ITC Limited and the Developer M/s. Nithesh Estates Limited, that the Developer M/s. Nithesh Estates Limited shall pay the Works Contract Tax, Service Tax, Municipal Land Tax etc. in respect of the construction at the Site and the Project in question. 6. He urged that the construction of the 'Residential Complex' in question by the Sub- contractor, M/s. L & T Limited on which Service Tax Liability was also discharged and paid by L & T Limited to the Government, could not be taken as discharged of the liability to pay the Service Tax by the Respondent Assessee Developer M/s. Nithesh Estates Limited on the entire contracted sum, which are received b....
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....in Section 65(105) (zzzh), since the 'Explanation' was inserted in the said Clause by the Finance Act of 2010 with effect from 01/07/2010 fixing such Service Tax Liability on the Developer as well, the same will not apply to the facts of the present case as the period in question is from March 2007 to March 2008. The said Sub- Clause(zzzh) of Clause(105) of Section 65 of the Finance Act, 1994 is also quoted below for ready reference:- "Section 65(105): "taxable service" means any [service provided or to be provided], (a) [any person], by a stock-broker in connection with the sale or purchase of securities listed on a recognized stock exchange; (b) to (zzzg) ... ... ... (zzzh): to any person, by any other person, in relation to construction of complex'] [Explanation : For the purposes of this sub- clause, construction of a complex 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 a person authorized by the builder before the grant of completion certificate by the ....
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....eate any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/ builders/ developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of 'self service' and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter/builder/developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of 'residential complex'. However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person woul....
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....:- 18. The 'Residential Complex' in question was undertaken to be constructed by the Respondent Assessee M/s. Nithesh Estates Limited for ITC Limited under the Contract dated 01/04/2006. It is equally undisputed before us that the construction activity in question was in its entirety sub-contracted by M/s. Nithesh Estates Limited to M/s.Larsen and Toubro Limited. There is no material on record or evidence to indicate that any part of construction activity in question was undertaken by the Respondent Assessee M/s. Nithesh Estates Limited itself. The fact of sub-contract of the entire 'Residential Complex' in question by the Respondent Assessee M/s. Nithesh Estates Limited to M/s. Larsen and Toubro Limited is not disputed by the Revenue. It is also not disputed that due Service Tax on the payments made to the sub- contractor M/s. L & T Limited stood paid to the Government. 19. The Central Board of Excise and Customs (CBE&C) for the pre-amendment period prior to 01/07/2010 has issued the aforesaid Circular No.108/2/2009-S.T. dated 29/01/2009 clarifying this position, that in such cases, where the ultimate owner (M/s. ITC Limited in the present case) enters into a Contract for co....