TMI Blog2014 (3) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of CCE, Chandigarh vs. U.B. Construction (P) Ltd. [2014 (1) TMI 402 - CESTAT NEW DELHI] has held that the explanation to Section 65 (105) (ZZZh) added w.e.f. 01/7/10 expands the scope of this clause and hence the same is not a clarificatory amendment and, as such, it cannot be given retrospective effect and accordingly during period prior to 01/7/10, when this explanation was not there, no service tax can be charged on the amount received by the builders/developers from the prospective buyers, that same view has been taken by the Tribunal in the case of R.F. Properties & Trading Ltd. vs. CCE, Jaipur [2013 (7) TMI 44 - CESTAT NEW DELHI] that in view of this, in both the cases, the appellant/respondent are eligible for refund on merits Refund - period of limitation - Held that:- since in terms of the findings of the Commissioner (Appeals) which have not been disputed, the service tax had been paid under protest, the limitation period would not apply. Unjust enrichment - Held that:- there is no evidence that they had charged any amount towards service tax from their customers. The presumption under Section 12B of the Central Excise Act, 1944 is a rebutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly the appellant was required to take service tax registration and pay the service tax. The service tax amounting to Rs. 8,96,303/- was paid by the appellant during the period from December 2005 to October 2006. However, in August 2006, the CBEC (Tax Research Unit) issued a Circular No. 332/35/2006 TRU dated 01/8/06 wherein in respect of a question as to whether service tax is applicable on a builder, promoter or developer who builds a residential complex having more than 12 residential units by engaging a contractor for construction of such residential complex, it was clarified that it is the contractor who shall be liable to pay service tax on the gross amount charged by him for construction service provided to the builder, promoter or developer under construction of complex service falling under Section 65 (105) (ZZZh) and that if no other person is engaged for construction work and the builder, promoter or developer undertakes the construction work on his own without engaging the services of any person, then in such cases in absence of service provider and service recipient relationship, the question of providing taxable service by any other person does not arise. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,50,000/- paid by them during the period from 16/6/05 to 31/7/06. The refund claim was rejected by the Jurisdictional Deputy Commissioner vide order-in-original dated 10/01/07. The Deputy Commissioner in his order rejected the claim observing that M/s Raj Homes have not submitted documents to prove that their contractors have discharged the service tax liability and that even if the contractors have discharged service tax liability then also, M/s Raj Homes would be liable to pay the service tax, as they by their own admission, have undertaken construction of residential complex on which service tax is to be paid by them as per the clarification issued by the TRU. On appeal being filed against this order, the Commissioner (Appeals) vide order-in-appeal dated 17/07/07 allowed the appeal holding that M/s Raj Homes are not liable to pay service tax and that there is no unjust enrichment involved as a number of the customers have given affidavits to the effect that M/s Raj Homes have not charged any amount towards service tax from them. Against this order of the Commissioner (Appeals), the appeal has been filed by the Revenue. 4. Heard both the sides. 5. Shri Prabhat Kumar, Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such builders/developers would be liable to pay service tax on the amount received by them from the prospective customers with whom they entered into a contract for construction of residential units, that this explanation cannot be given a retrospective effect, that the Tribunal in the case of CCE, Chandigarh vs. U.B. Construction (P) Ltd. reported in 2013 (32) S.T.R. 738 (Tri. - Del.) has held that the explanation to Section 65 (105) (ZZZh) added w.e.f. 01/7/10 expands the scope of this clause and hence the same is not a clarificatory amendment and, as such, it cannot be given retrospective effect and accordingly during period prior to 01/7/10, when this explanation was not there, no service tax can be charged on the amount received by the builders/developers from the prospective buyers, that same view has been taken by the Tribunal in the case of R.F. Properties Trading Ltd. vs. CCE, Jaipur reported in 2013 (31) S.T.R. 578 (Tri. - Del.), that in view of this, in both the cases, the appellant/respondent are eligible for refund on merits, that in both the cases the refund claims are not hit by limitation, as in the case of M/s Krishna Homes, the refund claim for the period fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o one specie of contract to provide for labour and service alone and that nothing in Article 366 (29A) limits the terms works contract . Both the DRs, therefore, pleaded that in view of the judgment of Larger Bench of the Apex Court in the case of M/s Larsen Toubro Limited and others vs. State of Karnataka others (supra) the assessees would not be eligible for refund, as the service tax had been correctly paid by them on the amount charged by them from their customers for building of the residential units for them. 7. We have considered the submissions from both the sides and perused the records. 8. Coming first to the question as to whether the activity of M/s Krishna Homes and M/s Raj Homes was taxable during the period of dispute or not, by Finance Act, 2005, Clause (ZZZh) was introduced into Section 65 (105) of Finance Act, 1994, so as to bring within the purview of the term taxable service , a service provided or to be provided to any person by any other person in relation to construction of complex . The expression construction of complex was defined in sub-Section (30a) of Section 65 and accordingly this expression covered -(a) construction of a new residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of complex service falling under Section 65 (105) (ZZZh) of the Finance Act, 1994 and that if no person is engaged by the builder, promoter, developer for construction work who undertakes construction work on his own without engaging the services of any other person than in such cases, in absence of the service provider and service recipient relationship, the question of providing taxable service to any person by any other person does not arise. W.e.f. 01/7/10 an explanation was added to Section (105) (ZZZh) which was as under :- Explanation - For the purposes of this sub-clause, the construction of a new building which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorized by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer.] Thus, in terms of this explanation, when a builder/promoter /d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into by a builder/promoter/developer with prospective buyers for construction of residential units in a residential complex against payments being made by the prospective buyers in instalments during construction and in terms of which the possession of the residential unit, is to be handed over to the customers on completion of the residential complex and full payment having been made, are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts a builder/developer with prospective customers for construction of residential units in a residential complex. Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65 (105) (ZZZh) w.e.f. 01/7/10, and therefore, it has to be held that such contracts were not covered by Section 65 (105) (ZZZh) during the period prior to 01/7/2010. 10. Coming to the question of limitation, while refund claim filed by M/s Krishna Homes for the period is within time as the service tax had been paid during the period from December 2005 to October 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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