TMI Blog2009 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructed property on its own can not be subject to service tax. - ST/94/2008 - 805/2009 - Dated:- 14-5-2009 - Ms. Jyoti Balasundaram, Vice President and Shri P. Karthikeyan, Member (Technical) (Final Order No. 805/2009 dt. 14.5.2009 certified on 14.7.2009 in Appeal No. ST/94/2008) Shri G. Natarajan, Adv. for Appellants. Shri V.V. Hariharan, Jt. CDR for Respondent. Per P. Karthikeyan: M/s. Prince Foundation Ltd. (PFL), the appellants are engaged in "commercial or industrial construction" and "construction of residential complex". These activities are subject to service tax respectively from 10.9.2004 and 16.6.2005. PFL completed construction of two commercial complexes namely Prince Infocity and Ambattur Software Technology Park (ASTP) and was engaged in construction of a residential complex named Prince Greenwood when the impugned proceedings started. Following audit of the records maintained by the assessee, the departmental authorities noticed instances of omission on the part of PFL to pay service tax due. Adjudicating allegations of non-payment/short-payment of service tax on various activities, Commissioner passed the impugned order demanding an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for 70% share of land, on which commercial complex at Prince Infocity, received by PFL situate. An amount of Rs.3,43,122/- towards tax and Rs.6,863/- towards cess was demanded under the category commercial or industrial construction service for the period 2005-06 and 2006-07 in respect of ASTP for work undertaken under an additional contract between PFL and KLA, Tencors Software India, Pvt. Ltd. The work undertaken under the additional contract was found to fall under post construction completion and finishing services which attracted tax on 100% of the value. An amount of Rs.11,52,592/- and cess of Rs.23,052/- under the category construction of complex for April 2007 in respect of Prince Greenwood residential complex was found due as per the entries of receipts in the ledger maintained by PFL. PFL had thus rendered taxable services namely commercial or industrial construction, construction of complex and, management, maintenance or repair services and received consideration but failed to pay service tax due to Government within the stipulated time. Hence the demand of tax, interest and penalties. 4. The appellants have challenged the impugned order on the following grounds: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first time in the proceedings is based on Board's Circular F.No.332/35/2006-TRU dated 1.8.2006 wherein the Board had clarified the scope of construction of residential complex services as follows: "If no other person is engaged for construction work and the builder/promoter/developer undertakes construction work on his own without engaging the services of any other person, then in such case in the absence of service provider and service recipient relationship, the question of providing taxable service to any person by any other person does not arise". The appellants being a developer and admittedly using his own labour for execution of the project, no service tax would be payable by the appellants. The appellants were therefore entitled to refund of the service tax and cess of Rs.41,65,692/ - already paid. Demand of service tax for construction of complex for the period October 2006 to April 2007 in respect of residential complex Prince Greenwoods involving Rs.40,84,010/- and cess of Rs.81,682/-, demand of service tax of Rs.8,97,874/- and cess of Rs.17,957/- [car parking, contingency, TNEB charges] and Rs.3,04,713/- and cess of Rs.6,094/- [towards TNEB charges and CMWSSB (wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants had accounted receipt of various amounts towards the construction of ASTP during February 2006 to March 2007 in accordance with the accounting standards issued by the Instituted of Chartered Accountants of India and the appellants had received consideration in advance as well as after registration. Amounts received prior to registration were not treated as income as it was not recognized as revenue by the relevant accounting standards, before registration. The appellants had bona fidely believed that tax was due only on the amount becoming income. In the result the appellants paid the service tax in advance and in certain cases of receipts also belatedly. The demand of interest was therefore not sustainable. The demand of service tax in respect of that portion of construction done for owner of the land in consideration for the sale value of land realized by PFL from the buyers of the balance constructed area, the demand is challenged on the basis that when the value of taxable service was received otherwise than by way of money, the same was not taxable before 19.4.2006. On 19.4.2006 provisions for demanding tax on such consideration were introduced in the statute for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CBEC Circular F.No.332/35/2006-TRU dated 1.8.2006. The Circular clarified the scope of the service provided under construction of complex service as follows:- S. No. Issue Legal Position 1. Is service tax applicable on Builder, Promoter or complex, Developer who builds a residential complex with the services of his own staff and employing direct labour or petty labour contractors whose total bill does not increase 4.0 lakhs in one F/Y ? In a case where the builder, promoter or developer builds a residential 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 services provided, to the builder/promoter/developer under 'construction of complex' service falling under Sec. 65(105)(zzzh) of the Finance Act, 1994. If no other person is engaged for construction work and the builder/promoter/developer undertakes construction work on his own without engaging the services of any other person, then in such cases in the absence of service provider and service recipient relationship, the que ..... 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