TMI Blog2011 (4) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... of Service Tax, Ahmedabad, has challenged the order dated July 3, 2009, made by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal), proposing to formulate the following two questions:- "(1) Whether the construction activity being performed/undertaken by M/s. Sujal Developers as a service to M/s. Saket III Co-operative Housing Society and its members, is a taxable activity or not? (2) Whether the honourable CESTAT has committed error in interpreting the Board's Circular No. 108/2/009-ST dated January 29, 2009 by not distinguishing the case of Sujal Developers from term 'developer' mentioned in Board's circular dated January 29, 2009 quoted supra, wherein Sujal Developers have particularly provided construction services to a housing society and no 'sale' is involved as such?" The appellant has filed a consolidated appeal in respect of the common order made by the Tribunal in four appeals. In the circumstances, the present appeal is treated to be an appeal filed in respect of the show-cause notice dated January 17, 2007 which culminated into the order-in-original dated December 31, 2007, rejecting the refund claim of Rs. 74,970. The respondent-Sujal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its members are the service receivers since the respondent, the society and its members are separate legal entities. It was submitted that the clarification issued by the Board on which reliance had been placed by the respondent, is that no tax is leviable where "sale" is involved, whereas in the instant case, there is no "sale" involved, but the respondent is providing service to the society and its members. Thus, the respondent being the service provider and the society and its members being the service receivers, the respondent had rightly paid the service tax in respect of the services rendered by it. It was submitted that the land in question belongs to the society and that the respondent had not sold the property to the society and its members, but only rendered construction services on the land of the society as per the agreement. In the instant case, the refund claim filed by the respondent had rightly been rejected by the adjudicating authority, as confirmed by the Commissioner (Appeals), and that the Tribunal was not justified in holding that the transaction in question was not a taxable transaction. It was submitted that in the circumstances, the appeal gives rise to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /developers and the ultimate owner is in the nature of "agreement to sell". Such a case, as per the provisions of the Transfer of Property Act, does not itself create an interest in or charge on such property. The property remains under the ownership of the seller and it is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then, the ownership of the property gets transferred to the ultimate owner. Therefore, any services provided by such seller in connection with the construction of residential complex till the execution of such sale deed, would be in the nature of "self-service" and consequently, would not attract service tax. The learned counsel submitted that in the present case, under the terms of the development agreement, the respondent was entitled to retain the full amount of collection received from the members after due payment of cost of land. In the circumstances, the respondent was developing the land and constructing residential buildings thereon which were being sold to the members by the respondent and as such, the service rendered by the respondent was in the nature of self-service and consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay service tax on the gross amount charged for the construction services provided, to the builder/promotef/developer under "construction of complex" service falling under section 65(105)(zzzh) of the Finance Act, 1994. It has been further clarified that 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 question of providing taxable service to any person by any other person does hot arise. The Board, in the clarification dated January 29, 2001, which has also been reproduced by the Tribunal in the impugned order, has clarified that "generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of 'agreement to sell', Such a case, as per the provisions of the Transfer of Property Act, does not itself create an interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrectness of the claim. From the statutory provisions, circulars as well as clarifications issued by the Board referred to hereinabove, it appears that for being chargeable to tax under section 65(105)(zzzh) of the Act is that the person concerned should render service to another person in relation to construction of complex. Thus the basic requirement for falling within the ambit of the said provision is that there has to be a service provider and a service receiver. In the present case as noticed earlier, the land on which the residential complex has been constructed belongs to the society. The society has entered into a development agreement with the respondent. Under the agreement between the society and the respondent-developer, the work of construction and development of the housing project has been entrusted to the respondent. The respondent-developer has agreed to develop the said land by attending to construction and development work and to complete the scheme duly and diligently on the terms and conditions contained in the agreement. Under the agreement, the developer is required to carry out every act necessary to complete construction and development of the project ..... X X X X Extracts X X X X X X X X Extracts X X X X
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