TaxTMI 
TaxTMI 
2024 (7) TMI 66
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....ed into joint development agreement with landowners to develop their land located in various places at Chennai. 4. The construction projects were for residential apartments. It was jointly decided by the appellant as well as the landowner to share the constructed apartments in fixed ratios. The appellant discharged the service tax on their share as a promoter/developer/ builder but failed to discharge service tax on the landowner share. Raising the above allegation show cause notices were issued for the periods June 2007 to September 2010 and October 2010 to September 2011 proposing to demand service tax under works contract services on the landowner share along with interest and also proposing to impose penalties. 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. 4. The Learned Counsel Ms. Radhika Chandrasekhar appeared and argued for the appellant. It is submitted that for the period prior to 01.07.2012, the appellant being a promoter/developer/ builder is not liable to discharge service tax. This has been clarified by the Board's Circular No.108/2/2009 ST date....
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.... to the landowner for the purchase of the land, the appellant had not discharged the service tax on such landowner share. It is prayed that the penalties may be set aside in terms of section 80 of the Finance Act, 1994. The Ld. Counsel prayed that the appeal may be allowed. 8. The Ld. AR N. Satyanarayanan, appeared and argued for the department. The finding in the impugned order was reiterated. With regard to the demand of service tax post 01.07.2012 the original authority has given detailed discussion in para 14.1 and 14.2. The appellant has not paid the service tax during the disputed period and therefore the penalties imposed are legal and proper. It is prayed that the appeal may be dismissed. 9. Heard both sides. 10. The issue to be considered is whether appellant is liable to pay service tax under Works Contract Services as a promoter/ developer/ builder for the period up to 01.07.2010 and for the period after 01.07.2010 to September 2011. 11. The issue as to whether a promoter/ developer/ builder is liable to pay service tax on construction of residential complex services for the period upto 01.07.2010 is settled by the decision in the case of M/s. Krishna Homes vs. C.C.E....
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....he 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 C.B.E. & C. dealing with legislation work, had vide Circular No. 332/35/2006-TRU, dated 1-8-2006 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, developer for construction work who undertakes construction work on his own without engaging the services of any other person than in such cases, in absence of the service provider and service recipient relationship, ....
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....iew 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". 12. This Tribunal in the case of M/s. Helios Estates Pvt Ltd., vs. CCE, Chennai vide Final Order No.40577/2024 dated 30.05.2024 had occasion to consider the very same and after following the decision in M/s. Krishna Homes set aside the demand interest and penalties for the period prior to 01.07.2010. 13. After appreciating the facts, and following the decision cited above we are of the considered opinion that the demand interest and penalties for the period up to 01.07.2010 cannot sustain and require to be set aside. Order accordingly. Post 01.07.2010 up to September 2011 ....