2025-VIL-1016-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Rule 2A of Service Tax (Determination of Value) Rules, 2006 –– Construction of houses – Department of the view that Appellant is liable to pay service tax on services rendered in relation to two projects, but Appellant did not pay applicable service tax – Department issued show cause notice to Appellant, proposing demand of Service Tax – Adjudicating Authority confirmed demands proposed in show cause notice – Whether demand related to project Prakruti Nivas is sustainable – HELD – Initially, Appellant entered into agreement for sale mentioning the total sale price and after receiving partial consideration, Sale Deed was executed in favour of customer and completed the construction – Construction of houses/villas in project Prakruti Nivas was completed and completion certificate was received from Gram Panchayat – Whenever the service is rendered for completion or construction of a flat for personal use of service recipient, no Service Tax is payable in view of exclusion in definition of residential complex service – Service tax is not required to be paid in terms of Board’s clarification dated 29-1-2009 – Demand related to this project is not sustainable and hence, set aside – Appeal is partly allowed - Recalculation of tax – Whether Appellant is liable to pay Service Tax in regard to Project Srinivasa Krupa – HELD – The said project is related to construction of residential unit – Appellant entered into agreement with land owners and entitled to a share of 50% of super built up area and sold 3 flats of their share receiving consideration – Service tax could not be levied on value of undivided share of land acquired by buyer of a dwelling unit or on value of goods which are incorporated in project by developer – Impugned Order-in-Original has confirmed demand on total value that includes the land, house and materials – In case of any liability held to be sustainable, demand needs to be re-quantified by taking 25% total amount charged as taxable value under Rule 2A of the Rules – In regard to Project Srinivasa Krupa, matter should be remanded back for redetermination of service tax in accordance with Rule 2A of 2006 Rules – Demand relating to Project Srinivasa Krupa needs to be recalculated.
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