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TMI Blog2018 (6) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... t, it emerged that appellants had entered into agreement for construction of residential complex as a joint venture project with Dwaraka Colony Welfare Association. The agreement was entered into between the appellants and the Dwaarka association to jointly develop the property of 54 old flats into a new residential complex for construction of 75 flats, out of which 45 flat owners would be entitled for a flat measuring 1000 sq.ft each in lieu of their relinquishing the undivided share of land in favour of the appellant. Appellant paid service tax on the amount collected from the land owners towards the additional area, however no tax was paid for the construction of 45 flats. Department took the view that the appellant is required to discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned proceedings. For the 45 apartments given to the individuals, the adjudicating authority had lost sight of the fact that it is an agreement between individuals and the appellant herein which is nothing but a construction work done for themselves attracting no tax. iii) The exclusion given in the definition of 'Residential Complex Service' refers to 'construction of complex by a person for his own residential purpose by engaging a contractor'. Hence the word 'person' includes 'persons' also. Hence the construction done by the members of Dwaraka Colony Association for their own residential purpose is totally out of service tax levy by virtue of the Exclusion Clause. iv) The members of Dwaraka Colony executed a legal power of at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undivided share of land of these 45 persons who relinquished the same in favour of the appellant. It is also not disputed that in consideration of such land rights, appellant has constructed and provided one flat to each of the 45 elsewhere flat owners. Thus, instead of paying consideration in cash to these 45 persons for the land rights, the same has been paid in kind by constructing and handing over the flats. In respect of the remaining 30 flats, as per the agreement entered into with the erstwhile flat owners' association, the appellant was unencumbered and free to sell those flats to other customers at a price. It is not disputed that appellant has discharged service tax liability in respect of the construction of these remaining 30 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner: 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., dated 29-1-2009 [2009 (13) S.T.R. C33]." (Emphasis added) The Circular No.108/2/2009-ST dt. 29.01.2009 which has been reiterated in the aforesaid circular dated 10.02.2012, reads as under : "Circular No. 108/2/2009-S.T., dated 29-1-2009 F.No. 137/12/2006-CX.4 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Imposition of Service tax on Builders - Regarding. Constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes 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, the transaction of sale is completed only after complete construction of the residential unit. Till the completion of the construction activity, the property belongs to the builder or promoter and any service provided by him towards construction is in the nature of self service. It has also been argued that even if it is taken that service is provided to the customer, a single residential unit bought by the individual customer would not fall in the definition of 'residential complex' as defined for the purposes of levy of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der are received, then such a person would be liable to pay service tax. 4. All pending cases may be disposed of accordingly. Any decision by the Advance Ruling Authority in a specific case, which is contrary to the foregoing views, would have limited application to that case only. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned." 5.3 From a combined reading of the provisions of Section 65 (105) (zzzh) of the Act as it was in force during the impugned period and the two Board's circulars dt. 29.01.2009 and 10.02.2012, we are of the considered opinion that there cannot be any service tax liability in respect of the construction of flats provided by the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X
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