"(1) ST/30403 & 30600/2016 CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench – Court No. – I Service Tax Appeal No. 30403 of 2016 (Arising out of OIO No. HYD-EXCUS-001-COM-078-15-16 dt.29.02.2016 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-I) M/s Aditya Construction Company India Pvt Ltd Aditya Mansion, Plot No.29/A, Road No.5, Banjara Hills, Hyderabad – 500 033 ......Appellant VERSUS Commissioner of Central Tax Hyderabad - ST 11-5-423/1/A, Sitaram Prasad Tower, Red Hills, Hyderabad – 500 004 ……Respondent and Service Tax Appeal No. 30600 of 2016 (Arising out of OIO No. HYD-EXCUS-001-COM-078-15-16 dt.29.02.2016 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad-I) Commissioner of Central Tax Hyderabad Kendriya Shulk Bhavan, LB Stadium Road, Basheerbagh, Hyderabad – 500 004 ......Appellant VERSUS M/s Aditya Construction Company India Pvt Ltd A-12, Chandralok Complex, Road No.2, Jubilee Hills, Hyderabad – 500 033 ……Respondent Appearance:- Shri C.S. Srinivas, Consultant for the Appellant/Assessee. Shri M. Anukathir Surya, Authorized Representative for the Respondent/Revenue. Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30040-30041/2025 Date of Hearing: 17.12.2024 Date of Decision: 28.01.2025 (2) ST/30403 & 30600/2016 [Order per: A.K. JYOTISHI] M/s Aditya Construction Company India Pvt Ltd (hereinafter referred to as the Appellant) are engaged in providing the services of ‘Construction of Complex Service’ (CCS) and ‘Works Contract Service’ (WCS). Based on the investigation, the department noticed that while they have paid Service Tax till March, 2008, though not having filed any ST3 return, they have not paid Service Tax for the period April, 2008 to June, 2010. It was also noticed that they have actually provided WCS though they have wrongly claimed the said service as CCS. It was also noticed that they have rendered CCS in two projects viz., ‘Hill Paradise-I’ and ‘Green Fields’ executed on development basis during the period 01.10.2006 to 30.05.2007. They have also undertaken projects on their own land, named as ‘Eden Park’ and ‘Windsor’ for the period 01.07.2010 to 30.09.2011. It was also noticed that they have claimed exemption of Service Tax on 67% of the value under Notification No. 01/2006-ST dt.01.03.2006 for the projects executed during the period 01.10.2006 to 31.05.2007 and exemption of 75% for the projects executed during the period 01.07.2010 to 30.09.2011. The department, therefore, worked out the Service Tax short paid amounting to Rs.3,25,17,745/- under the category of WCS for the period 01.06.2007 to 30.09.2011. 2. On adjudication, the Adjudicating Authority held the view at Para 21 that in view of the clarification by the CBEC vide Circular No. 151/2/2012-ST dt.10.02.2012, no Service Tax is leviable where Construction of Residential Complex Services (CRCS) were rendered prior to 01.07.2010 and that it would attract only post 01.07.2010 and confirmed the demand amounting to Rs.1,41,64,403/- for the said period. He has also held that the services rendered by the appellant during the period 01.07.2010 to 30.09.2011 are classifiable under the category of CRCS. 3. Learned Advocate for the appellant submits that in this case, the SCN was issued under the category of WCS for the period 01.06.2007 to 30.09.2011 but the demand has been confirmed under CRCS for the period after 01.07.2010. Demand for the period before 01.07.2010 was dropped in view of the Board’s circular. He also submits that in view of Circular No. 108/2/2009-ST dt.29.01.2009, if the ultimate owner enters into contract for construction of residential complex with a promoter/builder/developer, who (3) ST/30403 & 30600/2016 himself provides service of design, planning and construction and after such construction, the ultimate owner receives such property for his personal use, then such activity would not be subjected to Service Tax, because this case would fall under the exclusion provided in the definition of ‘residential complex’. This issue is clearly covered by the decision of Modi Ventures Vs CST, Hyderabad of this Bench vide Final Order No. 30887/2020 dt.03.03.2020. Para 10 of this order is relevant and is reproduced below. “10.The undisputed fact is that appellant had entered into two contracts one for sale of land and the second construction agreement for the flat with individual buyers. For a tax to be levied under works contract service, in the first place, it must be either construction of a new residential complex or a part thereof or completion of unfinished services related to it. The term “residential complex” under Section 65(91a) specifically excludes any construction for personal use by an individual. This builder has planned his business with a separate construction agreement entered into with individual flat owners. Hence they get excluded from the definition of works contract service. Therefore no service tax can be levied even for the period post 01.07.2010.” 4. He has also relied on the decision of this Tribunal in the case of Greenwood Estates Vs CCT, Secunderabad-GST [2024 (3) TMI 563 – CESTAT Hyderabad] and Modi & Modi Constructions Vs CCE, Hyderabad-II [2021 (45) GSTL 398 (Tri-Hyd)]. Additionally, he has also submitted that the Adjudicating Authority has traversed beyond the SCN, which is not legally sustainable. He further points out that the department has also filed an appeal in this case that the classification of service under CRCS instead of WCS by the Adjudicating Authority is not legal and proper. 5. We also find that the department is also in appeal against the said impugned order, wherein, they have, inter alia, challenged the decision of the Adjudicating Authority in holding the service under the category of CRCS and not under WCS. The only ground taken by the department is that in the facts of the case and also relying on the judgment in the case of LCS City Makers Pvt Ltd Vs CST, Chennai [2013 (30) STR 33 (Tri-Chennai)], the activities of the appellant would be chargeable to Service Tax under WCS and since the circular relied upon by the Adjudicating Authority only clarifies that no Service Tax is applicable to CRCS up to 01.07.2010 but not to WCS and therefore, the service was not exempt. Therefore, the only ground is that in the facts of the case, the activities were in the nature of WCS and not CRCS and that the circular referred to is only applicable to CRCS and not to WCS and hence, Service Tax is payable. Since both issues are (4) ST/30403 & 30600/2016 interrelated, we intend to take up both the appeals together for better appreciation of facts and dispose the appeals. 6. Learned AR for Revenue reiterates the grounds taken in the departmental appeal, insofar as the issue of classification under CRCS instead of WCS is concerned. On the issue of appellant’s appeal against the confirmation of demand of Rs.1,83,53,342/-, he is reiterating his submission that since the classification adopted itself was wrong, as it should have been WCS in the facts of the case and therefore, once it is classified under WCS, the circular will not be applicable for the period prior to 01.07.2010. In other words, once it is held that the proper classification should have been WCS, then even for the period prior to 01.07.2010, the Service Tax would be payable as the circular would not be applicable. 7. Heard both sides and perused the records. 8. We find that the issue involved is whether there is any liability to pay Service Tax by the appellant for the period prior to 01.07.2010 as well after or not and if they are liable to pay Service Tax, then under which category their services would fall. The appellant have canvassed that the matter regarding non-leviability of Service Tax on CRCS or for that under WCS prior to 01.07.2010 is no longer res integra as it has been held in catena of judgments passed by the Tribunals that Service Tax is not leviable. Insofar as the issue of the activity being in the nature of WCS, which is not covered by the scope of the circular, he further submits that in terms of settled law now irrespective of whether the nature of construction service is simpliciter or in the nature of WCS, no Service Tax is leviable on them for the period prior to 01.07.2010. Therefore, the dropping of demand by the Adjudicating Authority for the period prior to 01.07.2010 is correct. For the period beyond 01.07.2010, their main argument is that since the Adjudicating Authority himself has confirmed the demand under different heading than what was proposed in the SCN, the demand itself is not tenable on this ground alone. 9. We also note that in the impugned order, the Commissioner has examined the issue as to what would be the proper classification in the facts of the case. He examined it from the angle of WCS as well as CRCS. Thereafter, he concluded that CRCS is very much part and parcel of WCS (5) ST/30403 & 30600/2016 and when there is a specific classification available in the form of CRCS, there is no need to classify the activity under general heading of WCS. He has also noted that in the subject notice, the department initially had classified the services provided by the appellant under CRCS and later, the department changed the service category to WCS and felt that there was no need to change the classification of subject service just to circumvent the Circular No. 151/2/2012-ST dt.10.02.2012 issued by the Board in this regard clarifying that there is no Service Tax liability under this category prior to 01.07.2010. 10. Therefore, we find that conscious decision was taken by the Adjudicating Authority to stick to the classification under heading CRCS considering that the same is also covered within the ambit of WCS. In other words, he has classified the activity under CRCS considering that it was very much part of WCS and it is not being denied nor held by the Commissioner that it is construction service simpliciter. Therefore, holding of service as CRCS in the facts of the case even for the period beyond 01.07.2010 does not suffer from any infirmity and for the period prior to 01.07.2010, it does not matter whether it is CRCS or WCS, as no Service Tax is leviable on any construction activity, as held in cited case laws. The appellants have not extended any specific ground as to why there is no leviability of Service Tax for the period beyond 01.07.2010. On going through the appeal memorandum, we find that they have mostly stated that for the Service Tax demand beyond 01.07.2010, in terms of explanation inserted in Section 65(105)(zzzh), there should be a finding that appellants have received some amount before the grant of completion certificate by the authority. They have also admitted that there was no construction agreement with the client. They have also taken a plea that if at all there is any levy of Service Tax, it would be only on the value of construction for the unfinished portion of the flat and not on the amounts received after 01.07.2010 as held by Hon’ble Supreme Court in the case of Larsen & Toubro Ltd Vs State of Karnataka [2014 (1) SCC 708]. They have also emphasized that section 65(91a) of the Finance Act, 1994 which defines ‘residential complex’ and residential complex excludes 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 (6) ST/30403 & 30600/2016 residence by such person. Therefore, in view of the same, the demand for the period beyond 01.07.2010 is not tenable. 11. On the one hand, the department, in their appeal, is taking a stand that it is wrong on the part of the Commissioner to hold the activities undertaken by the appellant as CRCS, wherein, in the facts of the case, it should have been WCS. The appellants/respondents are mainly submitting that even if it is WCS, these are meant for personals use and therefore, there would not be any liability on the said amount. We find the facts are not clear here. As far as the liability of demand for the period prior to 01.07.2010 is concerned, there is no dispute that irrespective of the classification under CRCS or WCS, there shall not be any liability. The dispute is however for the period after 01.07.2010. While the appellant is mainly adducing that demand is not sustainable on the ground that Adjudicating Authority has not confirmed the demand under proposed classification and on this sole ground, the demand is liable to be set aside. We find that in the facts of the case, it is not tenable as Commissioner has classified in the impugned order as CRCS, considering it as part of WCS and by holding that this is more specific and at no point of time he has held that there is no element of WCS in the said CRCS. In other words, he has not held, in the case of appellant, that it was CRCS simpliciter rather he has held that it is CRCS, which is very much in the nature of WCS. We find that there is some merit in the departmental appeal as well as appellant’s claim. However, the best way would be to remand the matter to the Commissioner to decide the matter afresh for the demand for the period beyond 01.07.2010. While doing so, he shall go by the admitted facts and evidence on record to decide whether there is any exclusion or exemption available for the said service (WCS/CRCS) in the given set of facts and evidence on record to arrive at the demand for the period beyond 01.07.2010. 12. Therefore, we decide as follows:- a) Insofar as departmental appeal i.e., ST/30600/2016 is concerned, we feel that the Adjudicating Authority, in the remand proceedings, should examine proper classification i.e., WCS or CRCS, in the facts of the case and whether any exemption or exclusion exist for not (7) ST/30403 & 30600/2016 demanding Service Tax for the period beyond 01.07.2010. This appeal is allowed by way of remand. b) Insofar as the appellant’s appeal i.e., ST/30403/2016 is concerned, the exemption or exclusion available to the appellant for the period beyond 01.07.2010 needs to be redetermined in terms of the definition of the classification to be finally adopted by the Adjudicating Authority. This appeal is also allowed by way of remand. (Pronounced in the Open Court on 28.01.2025) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Veda "