TaxTMI 
TaxTMI 
2026 (6) TMI 59
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.... with common gated community facilities for the owners of villas in the project. According to the department the services allegedly were 'works contract service' as defined under section 65(105)(zzzza) of the Finance Act, 1994 (FA, 1994), and covered specifically under 'Construction of Complex' as defined under section 65(30a) of the FA, 1994. The department computed service tax liability at Rs.4,04,98,480/- (after adjusting Rs.58,46,024/- already recovered), based on project sale values and records seized during investigation. The appellant's VCES declaration for part of the period failed due to non-payment of the required amount within time. Accordingly, a show cause notice dated 24.10.2014 was issued demanding tax, interest, and penalties. The adjudicating authority confirmed the demand with interest, imposed equal penalty under Section 78, and Rs.10,000/- penalty under Section 77 for non-filing of ST-3 returns. Hence, the present appeal. 3. The learned Advocates S/Shri S. Rajagopalan and R. Balachandar appeared for the appellant and Smt. O.M. Reena, Ld. Authorized Representative appeared for the respondent. Submissions made by the Appellant 3.1 The Ld. Advocate Shri S.....
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....ucted a "residential complex" is therefore unsustainable. Accordingly, no service tax is payable up to 30.06.2012, as the activity falls outside Section 65(91a), and for the period from 01.07.2012 the Appellant is entitled to exemption under Sl. No. 14(b) of Notification No. 25/2012 dated 20.06.2012. H. Without prejudice, the issue is purely interpretational. The extended period is therefore unavailable, the SCN is time-barred, and penalty under Section 78 is wholly unsustainable. Accordingly, the demand, interest and penalties imposed under the impugned order are liable to be set aside in full. The Ld. Counsel prayed that the impugned order be set aside and the appeal be allowed with consequential relief. Submissions made by the Respondent-Revenue 3.2 Smt. O.M. Reena the Ld. Authorized Representative submitted on behalf of Revenue that: A. The assessee's projects qualify as a "residential complex" because they comprise more than 12 residential units, are developed under a single layout approval, bear a common project identity, and include shared amenities/common areas for which buyers pay. B. From the records available, it is seen that the assessee themselves ref....
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....val submissions, perused the records and examined the statutory scheme as well as the decisions cited at the Bar. The principal issue that arises for determination is whether the construction undertaken by the Appellant in respect of villas/individual houses, though situated in a larger layout having common amenities, can be brought within the ambit of "construction of residential complex" so as to attract Service Tax. 5. We find from the facts of the case that the dispute relates to eight projects, each of which has more than 12 units, with gated community features involving common utilities for the owners of the villas. The construction of villas are in two categories (i) outright construction and (ii) joint development. In outright construction the appellant enters into agreements with individual owners by paying advance towards the cost of land/ purchase the land. As and when prospective buyer approach the appellant they enter into an agreement of sale-cum-construction for the sale of undivided share of land and construction of villa. In joint development the appellant and the land owner enter into agreement by which the land owner hands over the land to appellant for the pu....
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....ere the Tribunal held that construction of individual residential houses does not amount to construction of a residential complex for service tax purposes. The said Order was affirmed by the Hon'ble Supreme Court in 2012 (25) S.T.R. J154. Hence it is clear that individual residential units were never intended to be taxed under the category of "residential complex". 6.4 The Appellant submits, without prejudice to their earlier submissions, that developers were brought within the service tax net only with effect from 01.07.2010 through the Explanation inserted in Section 65(105)(zzzh) by the Finance Act, 2010. That Explanation created a deeming fiction treating construction intended for sale, where consideration is received before completion certificate, as a taxable service. Prior to 01.07.2010, no such charge existed against developers. 6.5 The Appellant states that the amendment is prospective, as clarified by the TRU letter dated 26.02.2010 and Circular dated 01.07.2010, both of which state that activities covered only by the 2010 changes become taxable from that date. The Supreme Court in Union of India Vs Martin Lottery Agencies Ltd. [(2009) TIOL 60-SC-ST ], held that whe....
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.... contract', which became taxable only with effect from 1-6-2007 vide Section 65(105)(zzzza) of the Finance Act, 1994. It is also submitted that service tax cannot be levied from the appellants under any other head for any period prior to 1-6-2007. We have heard the learned Jt. CDR also, who submits that the case may at best be remanded to the authorities below, who apparently did not examine all the submissions of the party. After examining the records of the case, we do not think that a remand is warranted in this case inasmuch as the authorities below chose to sustain the demand of service tax raised in the show-cause notice, regardless of the fact that construction of individual residential units was not included within the scope of "construction of complex" defined under Section 65(30a) of the Finance Act, 1994. The definition reads as follows:- "Construction of complex" means - (a) construction of a new residential complex or a part thereof; or (b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry,....
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.... said that individual residential units were intended to be considered as a 'residential complex or a part thereof'. These observations of ours with reference to 'works contract' have been occasioned by certain specific grounds of this appeal and the same are not intended to be a binding precedent for the future. 3. For the reasons already noted, we set aside the impugned order and allow this appeal. The stay application also gets disposed of." (emphasis added) The above judgment was affirmed by the Hon'ble Apex Court in Commissioner Vs Marco Marvel Projects Ltd, - 2012 (25) STR J154 (SC). 8.1 The issue including the applicability/ non-binding nature of the Order in Macro Marvel (supra), came up for consideration by a Coordinate Bench of this Tribunal at Hyderabad, in the case of Commissioner of Central Tax Hyderabad Vs C.S.K. Realtors Ltd. [FINAL ORDER No. A/30185-30186/2024, dated: 06.03.2024]. The Tribunal held: "19. It is further urged that the ruling of M/s Macro Marvel Project is not applicable in the facts of the instant case as the said case only deals with the construction of individual houses, and it is not a case of construction....
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.... urges that in similar facts and circumstances, in the matter of Baba Construction Pvt Ltd., the Allahabad Bench also held that where individual houses are constructed in a gated community, the same is excluded under the definition in Section 65(91a) as reported at [2018 (15) GSTL 345]. The said ruling was also upheld by Apex Court against Revenue and the appeal was dismissed, reported at [2018 (15) GSTL J120 (SC)]. Accordingly, prays for dismissing the appeal of Revenue. 23. Having considered the rival contentions, we find that there is no significant change in the definition of residential complex as defined in Section 65(91a) of the Act both before and after 01.07.2012. Admittedly, the Respondent have sold developed plots to the buyers. Thereafter they have entered into agreement with the buyer/owner of plot to construct single house or residential unit. The house plan is also approved in the name of owner/buyer of the plot. Thus the activity is excluded or exempt both before and after 01.07.2012. Further, we find that the said issue is no longer res integra, in view of the ruling of this Tribunal in Macro Marvel Projects Ltd., & Baba Construction (supra) and which have....
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....residential units, or the complex should comprise of buildings having more than twelve residential units. Such building or buildings having more than twelve residential units should have a common area and any one or more of the facilities stipulated therein. That the building or buildings should have more than twelve residential units, should have a common area and should have any one or more of the facilities stipulated therein are cumulative requirements. The definition also states what is excluded. A complex may satisfy all the requirements as stated above, yet if the complex is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person, then such a complex is excluded from being considered a "residential complex" under Section 65(91a). From the appeal records, it is also evident from the photographs produced that these are individual houses that were constructed by both the appellants and not building or buildings having more than twelve residential units. Therefore, by virtue of these individual houses not being a building or buildings having m....