By TIOL News Service

MUMBAI, SEPT 23, 2014: AGAINST the appellant, a Service Tax demand of Rs.7,14,903/- was confirmed under the head Commercial or Industrial Construction Service.

Having met with failure at the Commissioner(A) level, the appellant is before the CESTAT.

It is submitted that bulk of the demand pertains to construction of low cost housing for Nagpur Improvement Trust and Ramtek Municipal Council; that the houses constructed for Nagpur Improvement Trust are leased out to people from low income group; that the ownership of the flats remains with the Nagpur Improvement Trust and similar is the case in respect of flats constructed for Ramtek Municipal Council who give these flats to slum dwellers and low income group for small consideration. It is further submitted that as per the definition of "residential complex" the same 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 is intended for personal use as residence by such person; that as per the explanation therein, "personal use" includes permitting the complex for use as residence by another person on rent or without consideration. Inasmuch as since the flats constructed by the appellant for Nagpur Improvement Trust would come within the exclusion clause there will not be any service tax liability on such activity.

Nonetheless, the appellant admitted that the construction of tourist centre for Maharashtra Tourism Development Corporation (MTDC) is covered under Commercial or industrial Construction Service but as far as construction of Vipassana Kendra for Nagpur Municipal Corporation is concerned, since the centre is used for meditation purposes for the registered members and it is not put to any commercial use, ST liability may not be attracted.

The AR submitted that there is no exemption available and, therefore, the appellant is required to pay Service tax and hence they may be put to terms.

The Bench observed -

++ Prima facie there is merit in the contention of the appellant that when Nagpur Improvement Trust gets flats constructed for renting out to low income group or slum dwellers, it would be construction of complex by a person directly engaging the service of another person and such complex is intended for personal use. Such complexes are specially excluded from the scope of the levy. Therefore, as far as the demand of service tax in respect of residential complex built for Nagpur Improvement Trust and Ramtek Municipal Council is concerned, the appellant has made out a prima facie case for grant of stay.

++ Similarly, in respect of construction of meditation centre for Nagpur Municipal Corporation, prima facie it appears that the said activity cannot be considered as a Commercial or Industrial Construction Service.

++ Out of a total of Rs.7,14,903/-, service tax liability would accrue mainly in respect of construction of tourist centre for MTDC and liability in this regard would be approx. Rs.85,000/-.

In fine, the appellant was directed to make a pre-deposit of Rs.85,000/- and report compliance for obtaining stay from recovery of the balance of the dues adjudged.

(See 2014-TIOL-1817-CESTAT-MUM)