TaxTMI 
TaxTMI 
2024 (9) TMI 1747
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.... case are that the respondents are engaged in providing services in relation to construction of complex services which is taxable, but they had failed to discharge the correct amount of service tax during the period 01.04.2007 to 31.03.2008. They had paid service tax from 16.06.2005 to 31.03.2008. On verification, it was noticed that they were availing cenvat credit on inputs/input services and paid service tax on the gross amount charged. From 01.04.2007, they were availing benefit of Notification No. 1/2006-CE dated 01.03.2006. Since they have been availing the cenvat credit and also availing the exemption under the said Notification, show-cause notice was issued to them on 23.09.2008 for recovery of the service tax short-paid amount....
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.... same should be treated as service. Since the transaction cannot be treated as a sale, it is his contention that unless the entire payment for the property is paid by the prospective buyer or on his behalf, after the completion of the construction, the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and which would attract service tax. 4. The learned advocate for the respondent submitted that the issue is no more res integra and has been decided in favour of the assessee by a series of judgments of this Tribunal. He submits that the learned Commissioner has rightly interpreted the Circular No. 108/2/2009-ST dated 21.09.2009 and dropped the proceedings....
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....isting of more than 12 residential units as per the relevant provisions mentioned above. Hence, the service provided to a person for construction of a residential unit cannot be treated as a taxable service. The definition given for a residential complex also makes this point very clear. It has also been clarified by Board's Circular No. 108/2/2009-ST dated 29.01.2009. The relevant portion of the circular is reproduced below. "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 the property for his personal use, then such activity woul....
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.... wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or (c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex". The expression residential complex was defined in Section 65(91a) of the Finance Act, 1994 as 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 any aut....
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....struction 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, the question of providing taxable service to any person by any other person does not arise. W.e.f. 1-7-2010 an explanation was added to Section 65(105)(zzzh) which was as under :- "Explanation. - For the purposes of this sub-clause, the construction of a new building which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during ....
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.... The Bombay High Court, also considered the issue whether the explanation was prospective or retrospective in operation and ruled that the explanation inserted by the Finance Act, 2010 brings within the fold of taxable service a construction service provided by the builder to a buyer where there is an intended sale between the parties whether before, during or after construction; that the 'Explanation' was specifically legislated upon to expand the concept of taxable service; that prior to the explanation, the view 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 ....