P. Dinesha, Member (J)
1. The period of dispute in this appeal is from January 2009 to November 2009. The Appellant is admittedly a developer engaged in the construction of residential complex, a Show Cause Notice dated 15.04.2010 came to be issued proposing to demand service tax on the construction of residential service for the period January 2009 to November 2009, along with applicable interest under sec. 75 of the Finance Act, 1994 and penalty under sec. 76 of the said Act. It appears that the appellant filed its reply thereby denying any liability to service tax by placing reliance on various Board Circulars and also many judicial pronouncements, but however, the Adjudicating Authority having considered the proposals made in the Show Cause Notice and the reply thereto filed by the appellant during adjudication, confirmed the proposed demands made in the Show Cause Notice vide Order in Original No. 34/2012 dated 6.11.2012. During adjudication, the learned Commissioner has analysed the agreements made available and, at paragraph 16.1 has categorically concluded that “… the activity of the assessee squarely falls under the definition of ‘Works Contract’ as stipulated vide Section 65(105)(zzzza) of the Finance Act, 1994.” To hold so, he has relied on the decision of K. Raheja Development Corporation Vs. State of Karnataka reported in 2006 (3) STR 337 (SC). It is against this order that the present appeal has been filed by the appellant.
2. We have heard learned Advocate Smt. Radhika Chandrasekar for the appellant and Shri M. Ambe, learned Deputy Commissioner, defended the impugned order of the respondent.
3. We have carefully considered the documents placed on record including the Show Cause Notice & the Order in Original; we find that the only issued to be decided by us is, “whether the appellant is liable to service tax on Works Contract Service for the period under dispute?”
4. Learned Advocate has claimed that the appellant being a developer, had entered into separate contracts for selling undivided share of land and for construction activity resulting in works contract service which fact has been accepted even by the Revenue; the liability to service tax on a developer having been brought under tax net only from 01.07.2007 vide insertion of explanation to Section 65(105)(zzzh) of the Finance Act, 1994, the Revenue could not have demanded service tax from the appellant. She would further contend that since there was composite contract involved, the demand of service tax on works contract service for the period under dispute was not sustainable, as held by the Hon’ble Apex court in the case of CCE, Kerala Vs. Larsen & Toubro Ltd. reported in 2015 (39) STR 913 (SC). She would also rely on numerous orders of various CESTAT Benches wherein, the Benches have followed the above decision of Hon’ble Apex Court in Larsen & Toubro Ltd. cited supra, including this very Chennai Bench in their own case for a different period vide Final Order No. 40255/2023 dated 6.4.2023.
5. Per contra, learned Deputy Commissioner relied on the findings of the Adjudicating Authority.
6. We have gone through the impugned order and we find that the Adjudicating Authority has admitted the involvement of ‘works contract’ in the execution of the project in question and hence, we find that the reliance placed by the appellant on the decision of Larsen & Toubro Ltd. cited supra is apt. The Hon'ble Supreme Court has clearly held that the liability to service tax on
‘Works Contract Service’ could only be after 01.07.2010.
Admittedly, the period of lis in this case is before that date and that the above decision has been followed consistently by almost all the CESTAT Benches across India and hence, respectfully following the above decision, we set aside the demand in the impugned order and allow the appeal with consequential benefits as per law, if any.
