TMI Blog2022 (12) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, the service tax could be levied. Levy of service tax on the appellant under construction of complex service cannot be sustained. - SERVICE TAX APPEAL NO. 51416 OF 2014 - FINAL ORDER NO. 51134/2022 - Dated:- 23-11-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Bipin Garg Ms. Kainat, Advocates for the Appellant Shri Harshvardhan, Authorised Representative of the Respondent ORDER This appeal is directed against the order dated October 24, 2013 passed by the Commissioner (Appeals), Central Excise, Jaipur-I [the Commissioner (Appeals)], by which the appeal filed by M/s Onkar Lal Saini [the appellant] to assail the order dated December 31, 2010 passed by the Additional Commissioner of Central Excise, Jaipur-I, has been dismissed. The Additional Commissioner, by the aforesaid order dated December 31, 2010, had confirmed the demand of service tax under the proviso to section 73(1) of the Finance Act, 1994 [the Finance Act] with penalty and interest. 2. The appellant, as contractor, constructed residential buildings in terms of the work order given by the Rajasthan Housing Board, Jaipur [ the Housing Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not fall under the definition of construction of complex service. 4. Shri Harshvardhan, learned authorized representative of the Department, however, supported the impugned order and submitted that it does not call for any interference in this appeal. 5. The submissions advanced by the learned counsel for the appellant and the learned authorized representative of the Department have been considered. 6. In regard to the first submission advanced by the learned counsel for the appellant, it is seen that neither the adjudicating authority nor the Commissioner (Appeals) has doubted that the contract was works contract . The Commissioner (Appeals) has, however, held that the construction of complex service, which was earlier taxable under section 65(105)(zzzh) of the Finance Act, would be taxable under section 65(105)(zzzza) of the Finance Act with effect from June 01, 2007. 7. The first issue that arises for consideration is whether Service Tax could have been levied before June 01, 2007 on composite contracts involving supply of goods/materials during execution of civil constructions. The Supreme Court in Commissioner of Central Excise, Kerala vs Larsen Toubro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service tax can only be on works contracts, and the measure of tax can only be on that portion of works contracts which contain a service element which is to be derived from the gross amount charged for the works contract less the value of property in goods transferred in the execution of the works contract. This not having been done by the Finance Act, 1994, it is clear that any charge to tax under the five heads in Section 65(105) noticed above would only be of service contracts simpliciter and not composite indivisible works contracts. xxxxx xxxxx xxxxxxx 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very 21 ST/59109/13 language of Section 65(105) which defines ―taxable service as ―any service provided . All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant that the work undertaken by the appellant for the Housing Board would not be covered under construction of complex service, also deserves to be accepted. 13. Section 65 (30a) of the Finance Act deals with construction of complex and is defined as follows:- 65 (30a)- construction of complex means (a) Construction of a new residential complex or a part thereof; or (b) Completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or (c) Repair, alteration, renovation or restoration of, or similar services in relation to, residential complex; 14. The taxable service under section 65 (105) (zzzh) of the Finance Act means any service provided or to be provided to any person, by any other person, in relation to construction of complex. 15. Residential Complex has been defined under section 65(91a) of the Finance Act as follows:- (91a) residential complex means any complex comprising of- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng not more than 12 residential units is not sought to be taxed under the Finance Act, 1994. For the levy, it should be a residential complex comprising more than 12 residential units. Admittedly, in the present case, the appellants constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the law makers did not want construction of individual residential units to be subject to levy of service tax . Unfortunately, this aspect was ignored by the lower authorities and hence the demand of service tax. In this view of the matter, we are also not impressed with the plea made by the appellants that, from 1-6-2007, an activity of the one in question might be covered by the definition of works contract in terms of the Explanation to section 65 (105)(zzzza) of the Finance Act, 1994 as amended. According to this Explanation, construction of a new residential complex or a part thereof stands included within the scope of works contract . But, here again, the definition of residential complex given under section 65(91a) of the Act has to be looked at. By no stretch of imagination can it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complex as per Section 65(91a) of Finance Act, 1994 is applicable for both the entries under Section 65(105)(zzzh) for levy of tax on construction of residential complex as also for entry under Section 65(105)(zzzza) for works contract. Therefore, there cannot be an argument that the expression residential complex has to be interpreted in one manner for works contract and in a different manner for levy of tax on construction of a residential complex. 5 . We further note that Revenue being aggrieved by the decision of the Tribunal in the said matter had filed appeal with the Hon ble Supreme Court and the Hon ble Supreme Court has dismissed the appeal filed as reported at 2012 (25) S.T.R. J514 (S.C.). So we consider that this matter is no longer res integra and service tax can be demanded under 65(105)(zzzh) only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where in one compound has many buildings, each having not more than 12 residential units . Therefore, we set aside the impugned order and allow the appeal. [emphasis supplied] 20. It also needs to be noticed that the same view was expressed by a D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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