Service Tax - Construction of Residential Complex - No Tax - holds Commissioner(Appeals)
THE appellant are having a Power plant at Kottayur, Kumbakonam. They had filed a refund claim of Rs.15,65,253/- being Service tax paid by them through a contractor who constructed 46 Nos of residential quarters for them.
The refund claim was filed on the grounds that they awarded a contract for construction of 46 numbers of Residential Quarters for residential/personal used of their employees/workforce, to the contractor; that the contractor paid Service Tax for the said work and collected the same from them; that construction of Residential complex was brought into service tax net with effect from 16.06.2005 that as per the definition of 'Residential Complex' under Section 65(91a) of the Finance Act, 1994, residential complex did not include a complex which was constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex was intended for personal use as residence by such person and that personal use included permitting the complex for use as residence by another person on rent or without consideration; that since the construction of the said buildings was for personal use, it did not attract Service Tax; that the contractor had paid Service Tax on the said construction by mistake of law and had collected the same from them; that they had borne the service tax themselves and had not passed on the same to any other person and hence applied for the refund.
The Commissioner(Appeals) held:
“I find that the appellant's case squarely fits into the exclusion clause of the definition under Section 65(91a) of the Finance Act, 1994. It also noticed that the Board vide Circular F.No.332/16/2010-TRU dated 24th May 2010 has clarified that as per definition, the residential complex (for service tax purposes) does not include a complex which is constructed by a person directly engaging any other person for designing/planning/construction and is intended for personal use as residence by such person. The definition also explains that personal use includes promoting use of such property as residence by another person on rent or even without consideration.”
The Committee of Commissioners will certainly find this order not proper and legal and the matter will reach the Tribunal soon. But we should be happy that there is at least one Commissioner who has respect for the Board and the Law!
Click here for the order of the Commissioner(Appeals)