TaxTMI 
TaxTMI 
2020 (3) TMI 1481
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....egory of "construction of complex service" and have been discharging service tax accordingly. Thereafter, based on a Circular No. 108/2/2009-ST dated 29.01.2009 issued by the CBEC, they came to the conclusion that they were not liable to pay service tax and discontinued paying service tax. A show cause notice dated 24.10.2011 was thereafter issued to the appellant demanding service tax of Rs 1,38,13,576/- including cess for the period 01.06.2007 to 31.12.2010 along with interest. It was also proposed to impose penalties upon the appellant under Section 78 of the Finance Act 1994 and also under Section 77(2) of Finance Act 1994. After following due process, the learned adjudicating authority passed the impugned order confirming the demands along with interest and imposing penalties as proposed in the show-cause notice. Aggrieved, the appellant challenged the demand on the following grounds: (i) prior to 01.07.2010 no service tax could be levied on activities of the appellant, (ii) Construction services provided for personal use are excluded from the definition of "construction of residential complex service" (iii) There were some amounts such as those coll....
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....Thus the legislative competence to tax has been enlarged by the 46th Constitutional amendment and to that extent, the scope of the residual clause entry 97 of the Union List was truncated. In other words, prior to 46th amendment, tax on composite works contract could be levied by the Union (although they never levied it) and after 46th amendment, the Union was competent to levy the tax only on such contracts to the extent they did not represent deemed sale or purchase of goods under Article 366(29A). The legislative competence of the Union to tax "works contracts" per se was never in doubt. 5. The question as to whether taxation of works contracts is covered by the charging section of the service tax provisions (Finance Act 1994) or otherwise was examined by the Hon'ble Supreme Court in the case of Commissioner of Central Excise & Customs Vs Larsen & Toubro Ltd [2015(39)STR 913(SC)]. Section 66 & 66A of this Act are the charging sections. Section 66 charges service tax on taxable services referred to in various sub-clauses of clause 105 of Section 65. Section 66A dealt with charging the service recipient under reverse charge mechanism in certain cases. The question before the Ho....
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...., repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) Turnkey projects including engineering, procurement and construction or commissioning (EPC) projects;" As may be seen, the charge of service tax on works contract service did not cover all types of works contract but only such contracts which are specified in the above definition. For the purpose of of this case the relevant clause is clause (c) "construction of new residential complex or a part thereof". 6. It is therefore important to examine the scope of the term "residential complex". It has been defined in section 65 (91a) as follows: "residential complex" means any complex comprising of- (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person di....
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....tation on taxation prior to 01.07.2010 also extends to cases where such services were rendered not as "construction of complex services" but as "works contract services" and it was answered in affirmative. To sum up, as far as construction of residential complex by builders are concerned: (i) Prior to 1-6-2007, if it is a composite works contract, no Service Tax is leviable in view of the judgment of the Hon'ble Apex Court in the case of Larsen & Toubro (supra). (ii) After 1-6-2007, it is chargeable under 'works contract' if it is a composite contract and under 'construction of complex services' if it is a service simpliciter. (iii) However, after 1-6-2007 but prior to 1-7-2010, whether it is a service simpliciter or a works contract, if the service is rendered prior to issue of completion certificate and transfer to the buyer, it is not taxable the service being in the nature of self service. (iv) Further, whenever the service is rendered for completion or construction of a flat for personal use of the service recipient, no Service Tax is payable in view of the exclusion in the definition of residential complex service. (v) After 1-7-2010, Service Tax is chargeable ....