TaxTMI 
TaxTMI 
2026 (9) TMI 656
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....s (ST/22053/2014 & ST/22054/2014); of which one appeal bearing No.ST/22054/2014 was dismissed on monetary limit by this Bench vide Final Order No.20113/2026 dated 03.02.2026. 3. Briefly the facts are that the respondent M/s. Skyline Builders, Cochin were registered under the category of Construction of Complex Services and Works Contract Services. The Commissioner in the impugned order dated 27.09.2013 has observed as follows: "13. As in the instant case, the Party had classified the service provided by them under the category 'Construction of Residential Complex' and further as they had already paid service tax for the said taxable service rendered during the period prior to 01/06/2007 under this category, in keeping with the clarification issued by the Board and extracted above, I find that the Party is not eligible to change the classification of the service being provided by them from 'Construction of Residential Complex Service' to 'Works Contract Service'. 14. Having found that the Party can only classify the service provided by them under the category 'Construction of Residential Complex Service' I intend to answer the que....
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....d two aspects covering tax liability during the same period contradict each other inasmuch as it would result in holding that a builder/promoter/developer who was engaged in providing residential construction activity was not liable to pay service tax at all on the construction activity if he had classified such services under 'construction of complex services' during the period prior to 1.6.2007 and also during the period after 1.7.2010. However, a builder/promoter/developer who did not pay tax during the period 1.6.2007 but classified such services under the taxable category of 'works contract services' w.e.f. 1.6.2007 would have paid service tax applicable at compounding rate thereon. The services rendered by both the above type/category of persons are construction of complex and their supply to buyers. Tax liability is on the services rendered by a person and is not dependent on the classifications made by such persons or permitted to be made by such persons and is to be determined and administered on an equitable basis. The adjudicating authority while issuing the above instructions and while adjudicating the matter in the instant cases has failed to consider t....
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.... to any person, by any other person, in relation to construction of a complex". The 'Construction of Complex' includes construction of a 'new residential complex'. For this purpose, 'residential complex' means any complex of a building or buildings, having more than twelve residential units. A complex constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex intended for personal use as residence by such person has been excluded from the ambit of service tax. 2. A view has been expressed that once an agreement of sale is entered into with the buyer for a unit in a residential complex, he becomes the owner of the residential unit and subsequent activity of a builder for construction of residential unit is a service of 'construction of residential complex' to the customer and hence service tax would be applicable to it. A contrary view has been expressed arguing that where a buyer makes construction linked payment after entering into agreement to sell, the nature of transaction is not a service but that of a sale. Where a buyer enters into an agreement to get a fully constructed residential unit, ....
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....the same may be brought to the notice of the undersigned. Also, in the subsequent Circular No.151/2/2012-ST dated 10.02.2012, the Board has clarified as follows:- 2.1 Tripartite Business Model (Parties in the model : (i) landowner; (ii) builder or developer; and (iii) contractor who undertakes construction) : Issue involved is regarding the liability to pay service tax on flats/houses agreed to be given by builder/developer to the land owner towards the land /development rights and to other buyers. Clarification : Here two important transactions are identifiable : (a) sale of land by the landowner which is not a taxable service; and (b) construction service provided by the builder/developer. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: (a) from landowner: in the form of land/development rights; and (b) from other buyers: normally in cash. (A) Taxability of the construction service : (i) For the period prior to 1-7-2010 : construction service provided by the builder/developer will not be taxable, in terms of Board's Circular No. 108/2/2009-S.T....