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2024 (5) TMI 1197 - AT - Service TaxIssues Involved: 1. Liability to pay service tax for construction of residential complexes for the period January 2009 to September 2009 and October 2009 to September 2010. 2. Applicability of Board's Circular No.108/02/2009-ST dated 29.01.2009. 3. Classification of services under "Construction of Residential Complex Services" vs. "Works Contracts Service". 4. Appropriation of service tax paid for the period July 2010 to September 2010. Summary: 1. Liability to Pay Service Tax: The appellant, a partnership firm engaged in providing construction services, was audited by the Internal Audit Group of the Service Tax Commissionerate, Chennai. It was noted that the appellant paid service tax for 166 flats sold up to December 2008 but did not pay service tax from January 2009 onwards for the remaining 6 flats, contending they were sold after obtaining a completion certificate. The Department issued show cause notices for the periods January 2009 to September 2009 and October 2009 to September 2010, proposing to demand service tax under "Construction of Residential Complex Services" along with interest and penalties. The original authority confirmed the demand for the entire period along with interest and imposed penalties. 2. Applicability of Board's Circular No.108/02/2009-ST: The appellant argued that they were not liable to pay service tax as they acted as a builder/promoter/developer, relying on Board's Circular No.108/02/2009-ST dated 29.01.2009. The circular clarified that a builder/promoter/developer is not required to pay service tax up to 1.7.2010. The Tribunal in the case of Krishna Homes vs. CCE Bhopal held that there was no intention for the government to tax the activity carried out by builders/developers for prospective customers for construction of residential units on payments made in installments prior to 1.7.2010. 3. Classification of Services: The appellant contended that the demand was confirmed after granting the benefit of abatement, indicating that the construction services were composite in nature involving the use of materials and services. For the period prior to 1.7.2012, the demand under "Construction of Residential Complex Services" cannot sustain as composite contracts involving both materials and services fall under "Works Contracts Service". The Tribunal's decision in Jain Housing & Construction Ltd. vs. CST was relied upon, which was upheld by the Hon'ble Apex Court. 4. Appropriation of Service Tax Paid: For the period subsequent to 1.7.2010, the appellant discharged service tax amounting to Rs.67,77,193/- for the period from July 2010 to September 2010, which was appropriated by the adjudicating authority. The appellant did not contest this amount. The Tribunal noted that the demand was confirmed only for the period prior to 1.7.2010 and set aside the demand for this period. Conclusion: The Tribunal set aside the demand of service tax, interest, and penalties for the period up to 1.7.2010. The order of appropriation of Rs.67,77,193/- paid for the period after 1.7.2010 was not interfered with. The appeal was allowed with consequential relief, if any.
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