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2024 (5) TMI 667

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.... not paid appropriate service tax for providing construction of Residential Complex Service and that they are liable to pay service tax for the period upto February 2012. 2. Further, the appellant provided construction services for construction of engineering college by M/s.KTVR Siddhammal Charitable Trust. The appellant having provided construction of commercial nature though required to pay service tax for the period upto 2007-08 to 2009-10 for the construction of the commercial complex had not paid service tax. Show cause notice dt. 18.04.2013 was issued to the appellant proposing to demand the differential service ta x along with interest and also for imposing penalty. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 3.1 The Ld. Counsel Shri S. Durairaj appeared and argued for the appellant. In regard to the demand made in the SCN under Works Contracts Service for the construction of RCS it is submitted by the ld. Counsel that for the period upto 1.7.2010 the appellant is not liable to pay service tax. It is submitted that the appellant has provided service....

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.... running educational institution which is an Engineering College approved by All India Council for Technical Education (AICTE). The Department does not dispute that the building is used solely for education purposes. When the building is used by an educational institution, it cannot be considered to be used for commercial purposes. The Board Circular No.80/10/2004-ST dt. 17.09.2004 at para 13.2 was adverted to by the ld. Counsel. The decisions in the case of Commissioner of Service Tax Vs S.M. Sai Corporation - 2016 (42) STR 716 (Tri.-Mumbai) and Ratan Das Gupta & Co Vs CCE - 2017 (3) GSTL 247 (Tri.-Delhi) were relied by the learned counsel to submit that when the building is used for educational purposes, the construction of such buildings cannot be said to be commercial construction. For this reason, the demand made under Works Contracts Service alleging that the building is used for commercial purpose cannot sustain. Ld. Counsel prayed that the demand raised in regard to the construction of educational institutions may be set aside. 3.6 Ld. Counsel argued on the ground of limitation also. It is submitted that the appellant had paid the service tax for construction of residentia....

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.... The demand in the SCN is for the period April 2009 to February 2012. The first issue is with regard to the demand made under 'Works Contracts Service' in respect of construction of residential complex. The demand pertains only to a single residential complex. It contains 96 units. It is explained by the adjudicating authority in para 24.12 of the order that the appellant after conceptualizing the project, arranged for the sale of the undivided share of the land to the prospective purchasers (allottees) subject to the condition that the allottee should allow the flat to be constructed through the builder / promoter, viz. appellant. It is very much clear from the agreement itself that the appellant is a promoter/developer/builder of the residential project. As per circular No.108/02/2009 dated 29.01.2009, the Board has that a builder/promoter/developer is not liable to pay service tax for the period prior to 1.7.2010. The Circular reads as under : "3. The matter has been examined by the Board. Generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of 'agreement to sell'. Such a case, as per the provisions of the Transfer ....

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....for construction of residential units in a residential complex. Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65(105)(zzzh) w.e.f. 1-7-2010, and therefore, it has to be held that such contracts were not covered by Section 65(105)(zzzh) during the period prior to 1-7-2010." 8. This view was followed by the Tribunal in the case of CC, CE & Service Tax, Visakhapatnam-I Vs Pragati Edifice Pvt. Ltd. as reported in 2019 (31) G.S.T.L 241 (Tri.-Hyderabad). After taking into consideration the circular issued by the Board as well as the decision cited supra, we are of the view that the appellant is not liable to pay service tax under 'Works Contracts Service' for construction of residential complex as builder/developer/promoter for the period upto 1.7.2010. 9. For the period w.e.f. 1.7.2010, the appellant is liable to pay service tax under the construction of residential complexes. The appellant has discharged service tax after 1.7.2010 till February 2012. However, the demand has been raised in the SCN denying the abatement claimed by the appellant. It is not disputed that the appellant has ....

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.... Such constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government constructions would not be taxable. However, if such constructions are for commercial purposes like local government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to service tax." 13. It is explained by the Board in the aforesaid circular that, when the building is solely used for educational purposes, the levy of service tax is not attracted. We, therefore, find that the building having been used for educational purpose and being non-commercial purpose, the said construction activity cannot be subject to levy of service tax during the disputed period. 14. The Ld. Counsel has argued on the ground of limitation also. It has to be noted that the entire demand has been raised on the basis of....