TaxTMI 
TaxTMI 
2025 (6) TMI 1848
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.... 2 SCN O.R. No.151/2011 dt.24.10.2011 23.03.2010 to 31.03.2011 Prakruti Nivas 1,23,88,659 1,23,88,659 Appeal No. ST/30005/2016 3 Order-in- Original No. HYD- EXCUS-002- COM-09-15- 16 dated 31.07.2015 SCN O.R. No.28/2013 dt.20.04.2013 April 2011 to March 12 Prakruti Nivas 69,10,508 1,33,14,533 Sri Vajralay am 51,42,172 Srinivas a Krupa 12,61,853 4 SCN O.R. No.85/2014 dt.16.05.2014 April 2012 to June 2012 Prakruti Nivas 5,26,783 8,41,815 Srinivas a Krupa 3,15,032 Total of Both Appeals 5,96,96,847 5,96,96,847 Show Cause Notices at Serial No. 1 & 2 were adjudicated vide Order-in- Original No. 027/2013 dated 24.07.2013 and show Cause Notices at Serial No. 3 & 4 were adjudicated vide Order-in-Original No. HYD-EXCUS-002- COM-09-15-16 dated 31.07.2015. All the demands were confirmed by the Adjudicating Authority. 2. Aggrieved by the above Order-in-Originals, the assessee has preferred the present two appe....
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.... certificate and does not requires the furnishing of any completion certificate. The Appellant constructed commercial complex without approval and applied for regularization under aforesaid rules. Accordingly, unauthorized construction was approved and regulated. There was no advance received from customer during the construction of the said complex either for purchase of part or whole of the complex. Nearly, after expiry of more than 4 years from the completion of construction and one year from the regularization by GHMC, the appellant and land owners have jointly sold the said building. Applicable VAT has been duly paid and Stamp Duty too. c) Srinivasa Krupa - Construction of Residential Complex: Appellant entered into development agreement with land owners on 07.09.2010 and entitled to share of 50% of the super building area. Appellant entered agreement for sale mentioning the total price and after receiving the partial consideration, the sale deed is executed in favour of the customer and completed the construction. 4. Department felt that service tax was leviable on said service in relation to above projects though the Appellant did not pay service tax on ....
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.... taxable event is provision of service in this regard Learned Counsel for the appellant relied on the following case laws: (a) Association of Leasing and Financial Service Companies v. Union of India 2010 (20) S.T.R. 417 (S.C.) (b) CST v. Consulting Engineering Services (I) Ltd. - 2013 (30) S.T.R. 586 (Del.) (c) Commissioner v. Schott Glass India Pvt. Ltd. - 2009 (14) S.T.R. 146 (Guj.) (d) Vistar Construction Pvt. Ltd. v. Union of India - 2013 (31) S.T.R. 129 (Del.) 7. Learned CA for the appellant also relied on Hon'ble Supreme Court decision in the case of Collector Vs Vazir Sultan Tobacco Company Ltd., [1996 (83) ELT 3 (SC)], wherein, it was held that "Once the levy is not there at the time when the goods are manufactured or produced in India, it cannot be levied at the stage of removal of the said goods. The idea of collection at the stage of removal is devised for the sake of convenience". The construction of houses in the project of "Prakruti Nivas" was completed and infact had received completion certificate from Gram Panchayat on 30.03.2009 itself which fortifies the fact that the alleged service of construction of houses was completed.....
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....ntire demand is not sustainable. Various residential units built independently but sharing of roads, street lights, sewerage lines do not by themselves fall under the definition of residential complex. The only grounds to deny the benefit of personal use in impugned Order-in-Original was the individual houses constructed are for use of many different persons or in other words that whole of the residential complex should used by single person. The construction was done for different individuals for their personal use which falls within the ambit of exclusion portion of the definition of the residential complex. In this regard he relies on the following case laws: a. Jurisdictional CESTAT decision in the case of Modi Ventures vs. Commissioner of Central Tax, Secunderabad vide Final Order No. A/30882/2020 dated 03.03.2020. b. IVRCL Assets and Holdings Ltd Vs CCE, Hyderabad [2021 (52) GSTL 304 (Tri-Hyd)] 9. Learned CA for the appellant argued relating to project Shri Vajralayam and stated that the development agreement was entered in May, 2007 and total construction was completed in 2007 itself. There was certain deviation in the actual construction with sanctioned....
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....volving 3 components namely i) land on which the complex is constructed ii) goods which are used in construction and iii) service/labour viz: various activities which are undertaken by the builders directly or through other contractor. Central Government can tax only service component and two other components fall outside the purview of tax power of Central Government. The Supreme Court in Larsen & Toubro Ltd., and Another Vs State of Karnataka and Another [2014 (1) SCC 708] held that the power of Parliament to levy tax would be limited to only on the service component after excluding the value of the goods as well as the value of land from such component. Works Contracts (Composition Scheme for payment of Service Tax) Rules, 2007 do not provide for any specific mechanism or method. Since there is no Statutory Valuation Maxima on the composite services provided by the builder before, during or after the construction as held by Hon'ble CESTAT, Delhi in the case of Suresh Kumar Bansal Vs Union of India [2016 (43) STR 3 (Del)] which was followed by Hon'ble Jurisdictional High Court in the case of Vasudha Bommireddy Vs Assistant Commissioner of Service Tax, Hyderabad [2020 (35) GSTL 52....
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....ment submits that the Project Prakruti Nivas considered of 612 independent houses built on the land purchased in the name of the company M/s Vishal Projects Ltd.,, entered into 2 agreements with their customers i.e. Agreement for Sale and Sale Deed. Agreement for Sale which specifically mentioned the consideration for which the concerned house is being offered for sale, the initial advance being acknowledged and the number of instalments under which the balance consideration is to be paid to the developer. The agreement also mentioned about the common amenities being provided by the developer as such indicating that the concerned house is not an independent/individual. Sale deed with specifically mentioning the consideration for which a house/semi finished house/basement level duplex along with lawn on which the such unit is constructed. The fact of execution of a Sale Deed denotes the transfer of the title of the property from the developer to the customer for the consideration mentioned therein. The two agreements when examined in conjunction, shows that the initial agreement for sale is mode on the actual value of the house/unit, whereas, the Sale Deed is executed for a lesser a....
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....e, so heard simultaneously to decide together. 19. Project Prakruti Nivas: SCN OR No. 241/2010 dated 22.10.2010 for the period 16.06.2005 to 22.03.2010, SCN OR No. 515/2011 dated 24.10.2011 for the period 23.03.2010 to 31.03.2011 and vide SCN OR No. 28/2012 dated 20.04.2013 for the period 2011 to March 2012 demands were made. As per the appellants Project Prakriti Nivas which is related to 612 individual villas/houses on the land located at Annaram Village and completed the construction on 31.03.2009 and received completion certificate from the Competent Authority. Initially, appellant entered into agreement for sale mentioning the total sale price and after receiving partial consideration, the Sale Deed was executed in the favour of customer and completed the construction. 20. Under the Finance Act 1994 by Section 65(91a) the word 'residential complex' is defined as under : "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 ....
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....56) GSTL 3 (Kar)] is not applicable since in that case each building is not having more than 12 residential units. He has also placed reliance on Co-ordinate Bench decision in the case of Beriwal Constructions Company Vs Commissioner of Central Excise and Service Tax, Agra [2017 (5) GSTL 198 (Tri-All)] in which individual residential houses constructed and each block being residential unit was not under the purview of leviable of service tax. 25. Learned CA also argued that for being common approval, common facilities and common layout to levy the service tax for independent houses available as is not sufficient to impose service tax. Whereas, Learned AR argued that the project have common facilities as park, common water supply and sewerage treatment system. Therefore, this project under residential complex and liable for leviable of service tax. He also produced copy of agreement for sale in which para B to E of page 3 is important to mention as thus : B) The Developers are engaged in the business of development of plots of land by constructing buildings thereon. C) The Developer prepared the development plans of the housing project on the said property and p....
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.... 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. 29. The construction of houses/....
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.... 2011 to March 2012 as well as demand by show cause notice dated 16.05.2014 for the period April 2012 to June 2012 are also not sustainable. 33. Project Sri Vajralayam: By show cause notice OR No. 28/2013 dated 20.04.2013, demand was made for the period April 2011 to March 2012. The appellant entered into Development Agreement with land owners on 21.05.2007 with sharing partition of 70% entitlement of the built up area and have sold their entire share on 23.01.2012. Learned Adjudicating Authority observed that the total amount received towards sale of such flats is nothing but the consideration received for developing the entire project by rendering services both to the land owner and the ultimate customers. No doubt, in this regard, conclusion given by Learned Adjudicating Authority is appropriate, but it is not correct to say that the certificate produced by the appellant is not proper as required by the authorised authority. Learned CA admitted that there was certain deviation in the actual consideration with sanctioned plan. The State Government of Andhra Pradesh has prescribed rules vide Government Order dated 31.12.2007 for regularisation of unauthorised construction for p....
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....e deed need to be excluded, since the show cause notice was issued under Section 73(1a) of the Finance Act 1994. Referring the earlier show cause notices which gave such deduction it is also submitted that there is no statutory valuation mechanism on the composite service provided by the builder before, during and after the construction. Therefore, appellant is not liable to pay as demanded. Learned CA relied on Hon'ble Delhi High Court decision in the case of Suresh Kumar Bansal Vs Union of India [2016 (43) STR 3 (Del)] in which it was held that construction of complex intended for sale by builder before, during or after construction deemed to be service provided by builder to buyer it was ultra vires as there was no statutory mechanism to ascertain value of services component subject of levy of service tax. Service tax could not be levied on value of undivided share of land acquired by buyer of a dwelling unit or on the value of goods which are incorporated in project by the developer. Learned CA also relied on Jurisdictional High Court decision in the case of Vasudha Bhoomireddy Vs Asst Commissioner of Service Tax, Hyderabad [ 2020 (35) GSTL 52 (Tel-HC)]. In this case, Hon'ble H....