TaxTMI 
TaxTMI 
2025 (11) TMI 951
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....pellant in construction of the Residential Complex 'Dugar Estate' for the period from 01.110.2005 to 31.03.2008, issued a Show Cause Notice proposing demand of Service Tax along with appropriate interest and imposition of penalties. 3. After due process in law, the Original Authority confirmed the proposals in the Show Cause Notice. Aggrieved by the same the appellant preferred an appeal contending, among other things, that (i) they are not liable to pay service tax in respect of construction of residential complex prior to 01.07.2010 in view of Board's Circular No.108/2/2009-St dated 29.01.2009 and insertion of Explanation to Section 65(105) (zzzh) ; (ii) that the amounts received from the customers that is alleged to have been not included in the taxable value are not includible and (iii) that there is no suppression and hence the extended period of limitation is not invokable and penalty is not imposable. 4. The Appellate Authority, placing reliance on the Apex Court decision in CCE v. Larsen & Toubro Ltd, 2015 (39) STR 913 held that the impugned construction of complex service is liable to service tax only under Works Contract Service with effect from 01.06.2007 and went ....
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....that it is undisputed that the appellant is engaged in a composite contract involving provision of service as well as transfer of property in goods. The Appellate Authority has taken cognizance of the fact that the SCN has allowed the benefit of 67% abatement vide Notification No.1/2006-ST and the tax was demanded @ 4%(@ 12% on 33% of the value) and that VAT was also collected by the appellant. However, the appellate authority despite finding that the appellant was liable to service tax only under works contract service has yet gone on to uphold the demand of service tax for the period from 01.06.2007 as confirmed in the order in original impugned before the appellate authority along with the penalty imposed under Section 77. 10. As rightly contended by the appellant, the impugned order in original has confirmed the demand as per the proposals in the show cause notice which was under 'Construction of Complex' Service. 11. In this regard, it is apposite to reproduce the findings in the decision of the Tribunal in the case of Krishna Homes v. CCE, 2014 (34) STR 881. The relevant portions are as below: "8. Coming first to the question as to whether the activity of M/s. ....
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....earch 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, 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,....
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....der 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". 9. In view of the above, though in view of the Apex Court judgment in the case of M/s. Larsen & Toubro Limited and Others v. State of Karnataka & Others (supra), the agreements entered into by a builder/promoter/developer with prospective buyers for construction of residential units in a residential complex against payments being made by the prospective buyers in instalments during construction and in terms of which the possession of the residential unit, is to be handed over to the customers on completion of the residential complex and full payment having been made, are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts a builder/developer with prospective customers for construction of residential units in a residential c....