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TMI Blog2025 (3) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... lue in their ST-3 returns submitted in respect of the period from March 2009 to June 2010. It was alleged that they have not discharged service tax on 'Works Contract Service'(WCS, for short) on the ground that the services of construction of residential complex rendered by them covered under the Circular No.108/02/2009 dated 29.01.2009. Thereby, failed to discharge service tax of Rs.2,16,44,283/-; hence the same was proposed to be recovered along with interest and penalty. On adjudication, the demand was dropped by the learned Commissioner. Hence, the Revenue is in appeal. 3. At the outset, the learned AR for the Revenue reiterating the grounds of appeal has submitted that the respondent is engaged in the business of construction of residential units, flats, complexes and supplying the dwelling units to various customers. They have been classifying their services under the category of WCS right from the beginning i.e. 01.06.2007 and paying service tax upto 31.12.2008 under the category of WCS; however, during the period January 2009 to June 2010, the respondent had not paid any service tax on the entire amount received from their clients towards for providing services under WCS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and it is a 'self-service'. If the construction service was carried out by the builder himself, a sale agreement for the building would have been sufficient and there is no need for construction agreement. It is their contention that the adjudicating authority ought to have been verified each and every agreement made between the respondent and their clients in order to ascertain whether there is a contract of construction of a new residential complex or part thereof between the respondent and the clients. 4.1. Per contra, the learned consultant for the respondent has submitted that the respondent is the owner and promoter / builder of the project; as owner of the land, agreed to sell the undivided share of land and for construction of the apartment / independent units which includes car parking / common facilities / amenities etc. as per the agreement undertook the construction. Further it is submitted that the agreement is for construction of apartment / individual unit in a complex and not for construction of complex for each of the buyers. Referring to the Circular dated 29.01.2009, it is submitted that if any contractor is engaged in construction of complex (comprising of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r grounds of appeal averred that the respondent discharging the service tax under the WCS prior to March 2009 but discontinued to pay service tax for the period March 2009 to June 2010 referring to the Circular dated 29.01.2009. However, on going through the show-cause notice and the order of the learned Commissioner, nowhere it has been brought on record that the respondent had been paying service tax from 01.06.2007 to February 2009 under the WCS. In the show-cause notice, it is alleged that the amount received by the appellant during the period March 2009 to June 2010 as recorded in their financial records not suffered service tax even though they have rendered the WCS. On going through the sample agreement placed by the respondent during the course of argument between the respondent and one Mr. Justin Joseph, the buyer, it is clear that the respondent were engaged in the construction of two towers and 19 residential individual units and the lands owned by them and after construction of the said units sold the same to the buyers. The allegation of the Revenue on the other hand in their grounds of appeal is that the respondent as a promoter / developer of residential complexes re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment 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 service tax and hence construction of it would not attract service tax. 3. The matter has been examined by the Board. 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 by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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]. (ii) For the period after 1-7-2010, construction service provided by the builder/developer is taxable in case any part of the payment/development rights of the land was received by the builder/ developer before the issuance of completion certificate and the service tax would be required to be paid by builder/developers even for the flats given to the land owner. 8. This Tribunal taking note of the aforesaid circulars in CC,CE&ST Vs. Pragati Edifice Pvt. Ltd. (supra) case, summarised the findings as follows : - 11. .... ... ... 9. In view of the above, though in view of the Apex Court judgment in the case of M/s. Larsen & Toubro Limited and Others v. State of Karnataka & Others (supra), the agreements entered 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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