TaxTMI 
TaxTMI 
2018 (10) TMI 404
X X X X Extracts X X X X
X X X X Extracts X X X X
....unsel Shri G. Natarajan appeared and argued the matter, which can be summarized as under:- 2.1 The appellant has entered into a Deed of Agreement (Joint Development agreement) dated 14.07.2004 with Mrs. N. Vasanthal and Mr. N. Murugappan, who are owners of a land bearing Door Nos. 103, 103 A & 103/1, Nelson Manickam Road, Aminjikarai, Chennai, for development of the said land into a commercial complex whereby the above mentioned landowners would be entitled to 50 % of the constructed area and the remaining 50 % of the constructed area would belong to the appellant. The appellant would be entitled to sell their portion of constructed area along with proportionate share of Undivided Share of land (UDS). Similarly, another Deed of agreement dated 15.12.2004 has also been entered into by the appellant with Mr.A.M.P.A. Palaniappan, Mrs. A.M.P.A. Valliammai Achi and Mrs. A.Pl. Nachammai, who are co owners of the adjacent land, so as to develop the said land also into a common commercial complex. The landowners under this agreement would also be entitled to 50 % of the constructed area and the remaining 50 % for the appellant. Finally, the area entitled for the landowners and the appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... land owner, in respect of the commercial project - Navin's Presidium, commercial or industrial construction service (CICS) June 2005 to September 2009 Rs.3,97,29,247 II Demand of service tax on services rendered to buyers from the appellant's portion, on the ground that service tax is payable under commercial or industrial construction service and not under works contract service (composition scheme) - Navin's Presidium July 2007 to September 2009 Rs.2,84,15,050 Total Rs.6,81,44,297 2.3 The construction activity undertaken by the appellant involves both transfer of property in goods and services. The appellant had been paying service tax under WCS in respect of the amounts received from their buyers, post 01.06.2007 under composition scheme, whereas the demands in the impugned order are confirmed under CICS. In respect of the services provided to landowners, the demand is made on the ground that since the Joint Development agreements are entered into prior to 01.06.2007, the demand should be made under CICS. In respect of the services provided to the buyers also, the demand has been made under CICS on the ground that the construction ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only. The relevant portion of the said decision is reproduced as under:- "7.8 On the contrary, being composite works contracts, they will necessarily fall within the ambit of works contract service as defined under section 65(105)(zzzza) ibid. It is possibly with this intent in mind that the lawmakers have included in the definition of works contract, erection and commissioning service, commercial or industrial construction service, construction of complex service and in addition turnkey projects including EPC projects within the definition of Works Contract Service. 7.9 At this juncture, it is worthwhile to reproduce excerpts from the Union Finance Minister's budget speech in 2007:- "State Governments levy a tax on the transfer of property in goods involved in the execution of a works contract. The value of services in a works contract should attract service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovisions of Section 65A of the Finance Act, 1994, it would be the appropriate classification for the part of the service provided after that date." 7.12 Thus, for example, while construction of a new residential complex as a service simpliciter would find a place under section 65(105)(30b) of the Act, the same activity as a composite works contract will require to be brought under section 65(105)(zzzza) Explanation (c). For both these categories for the definition of residential complex, the definition given in section 65(105)(91a) will have to be adopted as discussed above will have to be taken into account. 7.13 We find sustenance in arriving at this conclusion by a number of decisions of the Tribunal in which it has held as under:- a. In the case of Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company - 2018-TIOL-1096-CESTAT-DEL, the Tribunal in para 7 has held as under:- "7. We note that in the present case, the SCN was issued on 27.05.2011. On that date, both the tax entries, namely, Commercial or Industrial Construction Service and Works Contract Service, were available in the Finance Act, 1994. The SCN did mention this i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mation of demand under various other services. On this ground itself, the entire demand confirmed by the adjudicating authority is liable to be set aside and we do so." c. In the case of URC Construction (P) Ltd. Vs. Commissioner of Central Excise, Salem - 2017 (50) STR 147, the Tribunal in paragraphs 9, 10 and 11 has held as under:- "9. The Hon'ble Supreme Court in re Larsen & Toubro & Ors. has decided thus '24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emand of service tax liability only under these two categories and not under Works Contract service. The demand confirmed in the impugned order under these categories namely under construction service for the period 10.09.2004 to 16.06.2005 under CICS for the period 16.06.2005 to 30.09.2008 cannot also sustain and are therefore set aside. So ordered 5.3 For the period 01.04.2008 to 30.09.2008, the demand confirmed is Rs. 26,88,611/-. We note that the appellant has not contested the liability under works contract for this period. The only argument brought forth by the Ld. Counsel is that they have discharged an amount of around Rs. 82 lakhs under this category after the visit of the departmental officers and therefore an amount of Rs. 36,88,611/- demanded in the impugned order should be considered as having been discharged. We find merit in his argument and hence the demand of Rs. 26,88,611/- under works contract service for the period 01.04.2008 to 30.09.2008 is required to be considered as having been paid, albeit subsequent to the visit of the officers. However, the interest liability if any that arise on this amount if not paid already will have to be discharged by the ....