Service Tax Exemption Granted for Construction Service to Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission.

Court Name : CESTAT Ahmedabad

Parties : Malani Construction Co Vs C.C.E. & S.T.-Rajkot 

Decision Date : 28 June 2023

Judgement ref : Service Tax Appeal No. 12892 of 2014- DB

Customs, Excise & Service Tax Appellate Tribunal

West Zonal Bench At Ahmedabad

REGIONAL BENCH-COURT NO. 3

Service Tax Appeal No. 12892 of 2014- DB

(Arising out of OIO-RAJ-EXCUS-000-COM-10-14-15 dated 19/06/2014 passed by

Commissioner of Central Excise, CUSTOMS (Adjudication)-RAJKOT)

Malani Construction Co

……..Appellant

Malani Complex,58,Kotecha Nagar,

Kalawad Road, Rajkot Gujarat

VERSUS

C.C.E. & S.T.-Rajkot

……Respondent

Central Excise Bhavan,

Race Course Ring Road...Income Tax Office,

Rajkot, Gujarat - 360001

APPEARANCE:

Shri. Vikas Mehta, Consultant for the Appellant

Shri Kalpesh P Shah, Assistant Commissioner (AR) for the Respondent

CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

HON'BLE MEMBER (TECHNICAL), MR. C.L. MAHAR

Final Order No. A/ 11389 /2023

DATE OF HEARING: 15.06.2023

DATE OF DECISION: 28.06.2023

RAMESH NAIR

The issue involved in the present case is that whether the appellant is

liable to pay the service tax under the head of “Construction of Residential

Complex” provided to Surat Municipal Corporation under the Jawaharlal

Nehru National Urban Renewal Mission.

2. Shri Vikas Mehta, Learned Consultant appearing on behalf of the

appellant at the outset submits that the issue is no longer res-integra as

the same has been decided in favour of the assessee in the following

judgments:-

3. Shri Kalpesh P Shah, Learned Assistant Commissioner (AR) appearing

on behalf of the Revenue reiterates the finding of the impugned order.

4. We have carefully considered the submission made by both sides and

perused the records. We find that in the present case the appellant have

provided the services of Construction of residential complex to the

Municipal Corporation of Surat under Jawaharlal Nehru National Urban

Renewal Mission which is not liable to service tax as decided in the following judgment:-

4. On careful consideration of the submissions made by both the

sides and perusal of record, we find that in the present case the demand

was raised on the following:-

(a) Construction of residential complex for GSPHCL,

(b) Construction of residential complex service provided to Surat

Municipal Corporation under Jawaharlal Nehru National Urban Renewal

Mission (JnNRUM) We find that the issue of levy of service tax on the construction service in respect of above categories have been categorically held as non taxable.

Relevant judgments are reproduced below.

(a) In the case of Jethanand Arjundas & Sons (supra), the Tribunal held

as under:

“7. After hearing both sides, we find that the activity of constructing

houses for slum people under the government schemes is not taxable

under Construction of Complex Services/ Works Contract/ CICS as it is

intended for personal use. The issue is no longer res integra as squarely

covered by Tribunal decision in the case of CCE & ST vs Ganesh

Yadav (Supra). As regards services to SEZ we find that this issue is also

covered by the decision of the Tribunal in the case of Reliance Port and

Terminals Ltd. Vs CCE & ST (Supra). Regarding construction of

stadium we find that identical issue has been decided by the Tribunal in

favor of the assessee in the case of B. G. Shirke Construction Technology

Put Ltd. Vs CCE (Supra). The construction of Vishwavidyalay for M. P.

Laghu Udyog is also for public welfare and not for commercial purpose,

hence not taxable in terms of Circular No.80/2004 dt 17.09.2004. In view

of above, we set aside the impugned order and allow the appeal in favor

of the appellant with consequential relief.”

(b) In the case of M/s. Khurana Engineering Limited (supra) this Tribunal

passed the following order:

“9. We have heard both sides and perused the appeal records. We

are of the considered opinion that the matter requires to be examined in

the light of the Section 65(91a) of the Finance Act, 1994 and the

explanation thereof which reads as under :

Residential Complex‖ has been defined under section 65(91a) of the

Finance Act as follows :-

(91a) ―residential complex‖ means any complex comprising of –

(i) a building or buildings, having more than twelve residential units;

(ii) a common area; and

(iii) any one or more of facilities or services such as park, lift, parking

spaces community hall, common water supply or effluent treatment

system, located within a premises and the layout of such premises is

approved by an authority under any law for the time being in force, but

does not include a complex which is constructed by a person directly

engaging any other person for designing or planning of the layout, and

the construction of such complex is intended for personaluse as residence

by such person.

Explanation : For the removal of doubts, it is hereby declared that for

the purposes of this clause. –

(a) ‖personaluse‖ includes permitting the complex for use as residence‘

by another person on rent or without consideration;

(b) ‖residential unit‖ means a single house or a single apartment

intended, for use as a place of residence;‖

The perusal of the above definition makes it dear that the complex which

is constructed with an intention for personal use as residence by a person

who is directly engaging any other person for designing/planning of

layout and the construction of such complexes out of the ambit of such

construction and thus from taxability. We draw the support from

the case of C.C.E., Aurangabad v. Mall Enterprises - 2016 (41) S.T.R. 119

(Tri.-Mum.) wherein it was held that not only residential complex is

designed or laid out by another person are excluded from the definition

but also the ones intended for personal use of such person i.e. the owner

of the complex. In another case titled as Nithesh Estates Limited v.

C.C.E., Bangalore,2015 (40) S.T.R. 815 wherein it was held that the

construction of residential complex for ITC (in that case) intended to

provide accommodation built for own employees, activity was covered by

definition of personal use in Explanation to Section 65(91A) of Finance

Act, 1994. Hence, the assessee‘s activity falls under exclusion of that

Section and as such is excluded from levy of Service Tax.

10. In the present case, the quarters/residential complexes were got

constructed by the AMC and AUDA for urban poor people for their

residential use, the same amounts to ―personal use‟. The confirmation of

demand qua these services by the Commissioner is therefore not

sustainable.

11. We also find that on the identical facts and issue in the matter of

Santosh Katiyar Vs. Commissioner of Central Excise, Bhopal –

2017(3)GSTL 203 the Delhi Tribunal held that :-

4. From the record, it appears that during the period under

consideration, the appellant neither took credit nor paid any Service Tax

on the impugned services. The department is of the view that the said

services are subject to service tax as per Chapter 5 of the Finance Act,

1994. But the fact remains that Section 65(91)(a) of the Finance Act

provides the meaning of complex where the building having more than 12

residential units with the common area.

In the explanation for the removal of doubts, it was declared that for the

purposes of this clause :

(a) ̳Personal use‘ includes permitting the complex for use as residence by

another person on rent or without consideration.

(b) ̳residential unit‘ means a single house or a single apartment intended

for use as a place of residence.

In the instant case, the allottee is paying the nominal rent or without

consideration.

5. From the record, it appears that the Notification No. 28/2010-S.T.,

dated 22nd June, 2010, clarified that the services is provided to

Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas

Yojana are exempted from the clutches of Service Tax. Further, vide F.

No. 137/26/206-CX.-4, dated 5th July, 2006, it was clarified that Service

Tax would not be leviable on construction of complexes under question if

their lay out does not require approval by an authority under any law for

the time being in force. From the letter dated 30-1-2004 issued by the

M.P. Urban Development Department, it appears that the said

construction was made under ―Rajiv Gandhi basti Vikas karyakram‖ which

was the Central sponsored scheme and the same is exempted from

service tax as per Circular No. 125/2010-S.T., dated 30th July, 2010.

5. In the light of above discussion and by considering the facts and

circumstances of the case, we are of the view that the M.P Government

has constructed the accommodation for the gandi basti people under the

Central sponsored scheme which is attempted to clean India as per Prime

Minister‘s mission.

6. When it is so, then we find no merits in the impugned order as no

service tax is leviable in the instant case. Hence, the impugned order is

set aside. The appellant will get the relief accordingly.

From the above judgment it can be seen that the identical fact is involved

in the above judgment and in the case in hand in as much as in both the

cases the construction service was provided to Jawaharlal Nehru National

Urban Renewal Mission and Rajiv Awaas Yojana. On this common fact in

the above judgment it was held that the service tax is not leviable to

such project. Hence, the ratio of the above judgment is directly applicable

in the present case.

12. As per our above discussion and finding which gets support of

above cited judgments, the impugned order is clearly not sustainable,

hence the same is set aside. The appeal is allowed with consequential

relief, if any arise, in accordance with law.”

5. As regards the service provided by the appellant to GSPHCL, the

issue has been considered in the following judgments.

(a) In the case of M/s. Sima Engineering Constructions, S. Rajangam,

T.M. Saravanan, M/s. Marimuthu Gounder & Sons (supra), the Tribunal

held as under:-

“6. The issue is whether construction of quarters for police personnel

would fall within the taxable service of construction of complex service

under section 65(30a) r/w section 65(105)(zzzh) of Finance Act, 1994.

The details of the period involved in these appeal is furnished by

appellant as given in the table below:

Thus, it can be seen that part of the demand is for the period prior to

1.6.2007. By applying the decision in the case of Larsen & Toubro – 2015

(39) STR 913, we hold that the demand for the period prior to 1.6.207 is

not sustainable and requires to be set aside, which we hereby do. For the

period after 1.6.2007, the ld. counsel has argued that the decision in

the case of Nithesh Estates (supra) would apply. The definition of

residential complex is reproduced as under:-

As per section 65[(30a) of the Finance Act, 1994, „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;]

As per Section 65(91a) of the Finance Act, 1994 „residential complex‟

means any complex comprising of -

(i) a building or buildings, having more than twelve residential units;

(ii) a common area; and

(iii) any one or more of facilities or services such as park, lift, parking

space, community hall, common water supply or effluent treatment

system, located within a premises and the layout of such premises is

approved by an authority under any law for the time being in force, but

does not include a complex which is constructed by a person directly

engaging any other person for designing or planning of the layout, and

the construction of such complex is intended for personal use as

residence by such person.

Explanation. - For the removal of doubts, it is hereby declared that for

the purposes of this clause, -

(a) ―personal use‖ includes permitting the complex for use as residence

by another person on rent or without consideration;

(b) ―residential unit‖ means a single house or a single apartment

intended for use as a place of residence;‖

7. Undisputedly, the appellants have entered into an agreement

with TNPHCL for providing services in relation to construction of

residential complex. However, these are meant for use of police

personnel. The said issue was considered by the Tribunal in the case of

Nithesh Estates (supra), wherein the Tribunal has observed as under:-

7.1 In this case there is no dispute and it clearly emerges that the

residential complex was built for M/s. ITC Ltd. and appellant was the

main contractor. Appellant had appointed sub-contractors all of whom

have paid the tax as required under the law. The question that arises is

whether the appellant is liable to pay service tax in respect of the

complex built for ITC. From the definition it is quite clear that if the

complex is constructed by a person directly engaging any other person

for design or planning or layout and such complex is intended for

personal use as per the definition, service tax is not attracted. Personal

use has been defined as permitting the complex for use as residence by

another person on rent or without consideration. In this case what

emerges is that ITC intended to provide the accommodation built to their

own employees. Therefore it is covered by the definition of „personal use‟

in the explanation. The next question that arises is whether it gets

excluded under the circumstances. The circular issued by C.B.E.&C. on

24-5-2010 relied upon by the learned counsel is relavant. Para 3 of this

circular which is relevant is reproduced below :

3. As per the information provided in your letter and during discussions,

the Ministry of Urban Development (GOI) has directly engaged the NBCC

for constructing residential complex for Central Government officers.

Further, the residential complexes so built are intended for the personal

use of the GOI which includes promoting the use of complex as residence

by other persons (i.e. the Government officers or the Ministers). As such

the GOI is the service receiver and NBCC is providing services directly to

the GOI for its personal use. Therefore, as for the instant arrangement

between Ministry of Urban Development and NBCC is concerned, the

Service Tax is not leviable. It may, however, be pointed out that if the

NBCC, being a party to a direct contract with GOI, engages a sub-

contractor for carrying out the whole or part of the construction, then the

sub-contractor would be liable to pay Service Tax as in that case, NBCC

would be the service receiver and the construction would not be for their

personal use.‖

It can be seen that if the land owner enters into a contract with a

promoter/builder/developer who himself provided service of design,

planning and construction and if the property is used for personal use

then such activity would not be subject to service tax. It is quite clear

that C.B.E.&C. also has clarified that in cases like this, service tax need

not be paid by the builder/developer who has constructed the complex. If

the builder/developer constructs the complex himself, there would be no

liability of service tax at all. Further in this case it was different totally, the appellant, has engaged sub- contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service

8. The said decision was followed by the Tribunal in the case of

Lanco Tanjore Power Co. Ltd. (supra) wherein the Tribunal discussed as

under:-

7. Construction of residential complex activity was carried out by the

assessee for M/s. Lanco. It is submitted that such residential units were

constructed for use as quarters of the employees of M/s. Lanco. It is

evident from the facts of the case that M/s.Lanco has engaged the

assessee with the specific purpose of construction of such residential

units which are meant for personal use of the employees of M/s. Lanco.

We extract below the statutory definition of section 65(91a) of the

Finance Act, 1994:-

Residential complex‖ means any complex comprising of -

(i) a building or buildings, having more than twelve residential units;

(ii) a common area; and

(iii) any one or more of facilities or services such as park, lift, parking

space, community hall, common water supply or effluent treatment

system, located within a premises and the layout of such premises is

approved by an authority under any law for the time being in force, but

does not include a complex which is constructed by a person directly

engaging any other person for designing or planning of the layout, and

the construction of such complex is intended for personal use as

residence by such person.

Explanation. - For the removal of doubts, it is hereby declared that for

the purposes of this clause, -

(a) personal use‖ includes permitting the complex for use as residence

by another person on rent or without consideration;

(b) residential unit‖ means a single house or a single apartment

intended for use as a place of residence;‖

The above definition specifically excludes construction undertaken for

personal use and such personal use includes permitting the complex for

use as residence by another person. We find that the above exclusion

clause covers the construction activity undertaken by the assessee.

8. We have gone through the case law relied upon by the respondents

where a similar case has been dealt with by the Tribunal. Following the

decision of the Tribunal in Nithesh Estates Ltd. (supra), we find no reason

to interfere with the impugned orders which are sustained and the

appeals filed by Revenue are rejected.‖

9. Following the said decisions, the facts being identical, we hold

that the levy of service tax cannot sustain. The impugned orders are set

aside and the appeals are allowed with consequential reliefs, if any.”

(b) In the case of C R Patel (supra), this bench of Tribunal passed the

following order:-

“4. We have considered rival submissions. We find that so far as the

period prior to 01.06.2007 is concerned it is not in doubt that the

demand has been made in the category of works contract service‖. The

works contract service was not taxable prior to 01.06.2007 has held by

Hon‘ble Apex Court in the case of Larsen & Toubro Ltd (Supra) ,

consequently the demand for the period 01.06.2007 made under the

category of the works contract service is set aside.

4.1 So far as the period after 01.06.2007 is concern it is seen that

the definition of the above ―works contract service‖ reads as under:

Works contract‖, for the purposes of section 65(105)(zzzza), means a

contract wherein,- (i) transfer of property in goods involved in the

execution of such contract is leviable to tax as sale of goods, and (ii)

such contract is for the purposes of carrying out,— (a) erection,

commissioning or installation of plant, machinery, equipment or

structures, whether pre-fabricated or otherwise, installation of electrical

and electronic devices, plumbing, drain laying or other installations for

transport of fluids, heating, ventilation or air-conditioning including

related pipe work, duct work and sheet metal work, thermal insulation,

sound insulation, fire proofing or water proofing, lift and escalator, fire

escape staircases or elevators; or (b) construction of a new building or a

civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new

residential complex or a part thereof; or (d) completion and finishing

services, repair, alteration, renovation or restoration of, or similar

services, in relation to (b) and (c); or (e) turnkey projects including

engineering, procurement and construction or commissioning (EPC)

4.2 The definition of residential complex excludes from the levy of

Service Tax ―complex which is constructed by a person directly engaging

any other person for designing or planning of the lay out and the

construction of such complex is intended for personal use as residence by

such persons.‖ This expression has been interpreted by Tribunal in the

case of Sima Engineering2018 (5) TMI 405 (Tri.-Chennai), wherein after

examining this conclusion para 7 & 8 as follows:

7. Undisputedly, the appellant construction of such complex is intended for personal use as residence by such persons. This expression has been interpreted by Tribunal in the case of Sima Engineering2018 (5) TMI 405 (Tri.-Chennai), wherein after examining this conclusion para 7 & 8 as follows:

7. Undisputedly, the appel s have entered into an agreement with

TNPCL for providing services in relation to construction of residential

complex. However, these are meant for use of police personnel. The said

issue was considered by the Tribunal in the case of Nithesh Estates

(supra), wherein the Tribunal has observed as under:-

7.1 In this case there is no dispute and it clearly emerges that the residential complex was built for M/s. ITC Ltd. and appellant was the main contractor. Appellant had appointed subcontractors all of whom have paid the tax as required under the law. The questionthat arises is whether the appellant is liable to pay service tax in respect of the complex built for ITC. From the definition it is quite clear that if the complex is constructed by a person directly engaging any other person for design or planning or layout and such complex is intended for personal use as per the

definition, service tax is not attracted. Personal use has been defined as

permitting the complex for use as residence by another person on rent or

without consideration. In this case what emerges is that ITC intended to

provide the accommodation built to their own employees. Therefore it is

covered by the definition of „personal use‟ in the explanation.

The next question that arises is whether it gets excluded

under the circumstances. The circular issued by C.B.E.&C. on 24-5- 2010

relied upon by the learned counsel is relavant. Para 3 of this circular

which is relevant is reproduced below :

3. As per the information provided in your letter and during discussions, the Ministry of Urban Development (GOI) has directly engaged the NBCC for constructing residential complex for Central Government officers. Further, the residential complexes so built are intended for the personal use of the

GOI which includes promoting the use of complex as residence by other

persons (i.e. the Government officers or the Ministers). As such the GOI

is the service receiver and NBCC is providing services directly to the GOI

for its personal use. Therefore, as for the instant arrangement between

Ministry of Urban Development and NBCC is concerned, the Service Tax is

not leviable. It may, however, be pointed out that if the NBCC, being a

party to a direct contract with GOI, engages a sub-contractor for carrying

out the whole or part of the construction, then the sub-contractor would

be liable to pay Service Tax as in that case, NBCC would be the service

receiver and the construction would not be for their personal use. It can

be seen that if the land owner enters into a contract with a

promoter/builder/developer who himself provided service of design,

planning and construction and if the property is used for personal use

then such activity would not be subject to service tax. It is quite clear

that C.B.E.&C. also has clarified that in cases like this, service tax need

not be paid by the builder/developer who has constructed the complex. If

the builder/developer constructs the complex himself, there would be no

liability of service tax at all. Further in this case it was different totally, the appellant, has engaged sub- contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax.

4.3 The said decision was followed by the Tribunal in the case of

Lanco Tanjore Power Co. Ltd. (supra) wherein the Tribunal discussed as

under:-

7. Construction of residential complex activity was carried out by the

assessee for M/s. Lanco. It is submitted that such residential units were

constructed for use as quarters of the employees of M/s. Lanco. It is

evident from the facts of the case that M/s.Lanco has engaged the

assessee with the specific purpose of construction of such residential

units which are meant for personal use of the employees of M/s. Lanco.

We extract below the statutory definition of section 65(91a) of the

Finance Act, 1994:- ―Residential complex‖ means any complex

comprising of — 5 ST/11405/2013 (i) a building or buildings, having

more than twelve residential units; (ii) a common area; and (iii) any one

or more of facilities or services such as park, lift, parking space,

community hall, common water supply or effluent treatment system,

located within a premises and the layout of such premises is approved by

an authority under any law for the time being in force, but does not

include a complex which is constructed by a person directly engaging any

other person for designing or planning of the layout, and the construction

of such complex is intended for personal use as residence by such

person. Explanation. — For the removal of doubts, it is hereby declared

that for the purposes of this clause, — (a) personal use‖ includes

permitting the complex for use as residence by another person on rent or

without consideration; (b) residential unit‖ means a single house or a

single apartment intended for use as a place of residence;‖ The above

definition specifically excludes construction undertakenfor personal use

and such personal use includes permitting the complex for use as

residence by another person. We find that the above exclusion clause

covers the construction activity undertaken by the assessee. 8. We have

gone through the case law relied upon by the respondents where a

similar case has been dealt with by the Tribunal. Following the decision of

the Tribunal in Nithesh Estates Ltd. (supra), we find no reason to

interfere with the impugned orders which are sustained and the appeals

filed by Revenue are rejected.‖

4.4 Similar view has also been taken in the case of Khurana

Engineering 2010 (11) TMI 81 CESTAT –Ahmd, wherein following has

been observed:

2. Learned advocate on behalf of the appellants, first of all submitted

that the service was provided by the appellant to Govt. of India for

providing the same as residential accommodation for the employees of

the Income Tax department. He drew our attention to the definition of

the construction of complex services given under the clause (30a) of

Section 65 to submit that personal use, according to the definition

includes permitting the complex for use as residence by another person

on rent or without consideration. In view of the definition of ̳Personal

Use‘ in the definition of ̳Construction of Complex‘ services, the services

provided by the appellant is covered by exclusion, which provides that

definition of service does not include the complex which is constructed by

a person directly engaging any other person for designing or planning of

the layout and the construction of such complex. In this case, the Govt.

of India provides 80 flats to Income Tax department on rent and

therefore, it is excluded from the definition of construction services. He

also relies upon the reply given by the Central Board of Customs and

Excise to National Building Construction Corporation Limited (NBCC), vide

Letter No. F. No. 332/16/2010-TRU., dated 24-5-2010, in support of this

contention. On the other hand, learned DR submits that it is not correct

to say that service has been provided to Govt. of India directly. He

submits that the land is owned by Income Tax department and Income

Tax department has requested the CPWD to construct the quarters for

them and funds have been made available to CPWD by Ministry of

Finance for this purpose. CPWD in reality has acted as a bridge between

Income tax department and the contractor and after the residential

complex is constructed, the same was handed over by CPWD to Income

tax department and therefore, in terms of the clarification issued by the

Board also, the appellant would be liable to pay service tax. He drew our

attention to the letter relied upon by the learned advocate and submitted

that in that letter, it has been clarified by the Board that if NBCC were to

construct residential accommodation and handover to Govt. of India,

there would be no liability to service tax.

However, if NBCC were to entrust the work to sub-contractor and such sub-contractor constructed the residential complex and handed over to NBCC who in turn handed over the same to Govt. of India, service tax would be leviable. He drew our attention to the observation of learned Commissioner in his order wherein he has also held that this is not a case where residence is for personal use of a person and is not covered by the explanation given under clause (30a). We have considered this submission. We find ourselves in agreement that the contention of the learned advocate that

service has been provided by the appellant to Govt. of India in this case

and CPWD and Income Tax department cannot be treated as separate

entities just because service has been provided to CPWD who in turn

handed over the same to Income Tax department. Further, learned

advocate also drew our attention to the notice issued by the CPWD

inviting tenders. The tender starts with words ―Tenders are invited on

behalf of the President of India‖. Further, we also find that the guarantee

executed by the contractor and agreement entered by the contractor

have been accepted by CPWD for and on behalf of the President of India.

Learned DR also fairly admitted that he has not got any clarification from

the department as to whether there is any evidence to show that CPWD

and Income Tax departments are separate entities and have to be

treated as separate entities. It is well known that various departments of

Govt., of India act on behalf of the President of India and therefore, it

cannot be said that CPWD can be equated with NBCC which is a Public

Sector under taking. It is also well settled that Public Sector undertakings

are not considered as Govt., departments and also cannot be considered

as STATE. Further, learned DR also could not show whether there was

any agreement between Income tax department and CPWD for the

purpose of construction of residential complex. Invariably when two

parties are independent entities, there would be an agreement. Absence

of any agreement between CPWD and Income tax department also

supports the case of the learned advocate. Further, since on behalf of the

President of India contractors are entered into, agreements are entered

into and bonds are accepted, Govt. of India is treated as Person‖.

Therefore, we are unable to agree with the learned Commissioner when

he says that the exclusion clause in the definition cannot be applied to

the Govt. of India. For ready reference, definition of Construction of

Complex Services is reproduced :- (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 preparing, 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] The definition of residential complex service has

been given under clause (91a) of Section 65 as under; ―Residential

complex‖ means any complex comprising of- (i) a building or buildings,

having more than twelve residential units; (ii) a common area; and (iii)

any one or more of facilities or services such as park, lift, parking space,

community hall, common water supply or effluent treatment system,

located within a premises and the layout of such premises is approved by

an authority under any law for the time being in force, but does not

include a complex which is constructed by a person directly engaging any

other person for designing or planning of the ayout, and the construction

of such complex is intended for personal use as residence by such

person. Explanation - For the removal of doubts, it is hereby declared

that for the purposes of this claus ayout, and the construction

of such complex is intended for personal use as residence by such

person. Explanation - For the removal of doubts, it is hereby declared

that for the purposes of this c e — (a) ―personal use‖ includes

permitting the complex for use as residence by another person on rent or

without consideration;

(b) residential unit‖ means a single house or a single apartment

intended for use as a place of residence.‖] We have already explained the

submission of learned advocate in brief and as explained by him in this

case, residential complex constructed by the appellant is meant for use

by the Income Tax department to provide the same on rent to the

employees and therefore, it is clearly covered by the explanation given

for Personal use‖ in the definition. In this case the CPWD has engaged

the appellant for construction of residential complex for giving it on rent

to the employees of Income Tax department and therefore this service

cannot be included in the definition of residential complex services. It is

basically the case of one department taking the help of another

department to get the work done basically because of specialization of

that department in preparing documents and get the work executed.

3. We also find alternative submissions made by the learned advocate are

to be sustained. The first alternative submission made was that the show

cause notice was issued on 4-10-2007 whereas, the service tax was

payable for the period from 16-6- 2005 to 30-7-2007 and therefore, a

portion of the demand is time barred. Even if a view is taken that CPWD

is to be treated as separate entity, in our opinion appellant would be

justified to entertain a belief that CPWD and Income Tax department are

to be treated as part of the Govt. of India and therefore, services provide

by him would not be liable to service tax. Further, as submitted by the

appellant in his submission, the agreement also provides that in case of

liability of any tax, the service receiver is liable to pay. In these

circumstances, the appellants had no reason to resort to suppression or

mis-declaration of the facts to avoid payment of service tax since if the

service tax was liable, as per the contract, CPWD was liable to pay

service tax. Under these circumstances, invocation of extended time limit

cannot be justified in this case. Therefore, penalties imposed under

various sections of Finance Act, 1994 also cannot be upheld.

4. Another alternative submission made by the learned advocate was that

the contract between the appellant and the CPWD was a works contract

and VAT has been paid treating the same as works contract and

therefore, no service tax was liable to be paid for the period prior to 1-6-

2007. He has cited several decisions in support of this contention.

However, we find that the decision of the Tribunal in the case of Cemex

Engineers v. Commissioner of Service Tax Cochin - 2010 (17) S.T.R. 534

(Tri. - Bang.) is relevant. In this case, the Tribunal had considered the

definition of residential complex services and works contract services and

had come to the conclusion that in view of the fact that construction of

new residential complex was included in the definition of works contract,

the construction of residential complex on the basis of works contract,

cannot be leviable to service tax prior to 1-6-2007. In view of the fact

that this decision is applicable to the facts of the present case, this would also go in favour of the appellants. 5. Further, in view of the fact that on merits, we have held that service provided by the appellant is to be

treated as service provided to Govt. of India directly and end use of the

residential complex by Govt. of India is covered by the definition

Personal Use‖ in the explanation to definition of residential complex

service, the other aspects need not be considered. In view of the

discussion above, the impugned order cannot be sustained and

accordingly the same is set-aside. Appeal is allowed with consequential

relief to the appellant.

5. Relying on the aforesaid decision, we hold that the use of the

residential complex by (GSPHCL) is excluded from the definition of

residential Complex as intended for personal use as residence by such

persons‖. In view of above, we do not find any merit in the order, the

order is set aside and appeal is allowed.

5. In view of the above judgments, in respect of construction service

provided to the service recipient M/s. GSPHCL and Surat Municipal

Corporation under Jawaharlal Nehru National Urban Renewal Mission are

non-taxable. Following the above decisions, we are of the view that

demand in the present case is not sustainable. The impugned order is

set-aside and the appeal is allowed.

4.1 The above judgment of this Tribunal has considered various judgment

and categorically found that the service provided to the service recipient

namely Surat Municipal Corporation under Jawaharlal Nehru National Urban

Renewal Mission are not taxable.

5. Considering the above decision, in the present case also the demand is

not sustainable. Hence, the impugned order is set aside. Appeal is allowed.

(Pronounced in the open court on 28.06.2023)

RAMESH NAIR

MEMBER (JUDICIAL)

C.L.MAHAR

MEMBER (TECHNICAL)