By TIOL News Service

MUMBAI, OCT 19, 2015: THIS is a Revenue appeal.

The Respondent assessee had constructed residential quarters for staff of New Parli Thermal Power Station and it is the case of the Revenue that such construction of staff quarters could be categorized under Residential Complex Services and Service Tax is payable.

A SCN came to be issued but the adjudicating authority dropped the proceedings and the Revenue appeal was also rejected by the Commissioner(A).

This is what the Commissioner (A) held -

The only ground raised by the appellant for challenging the OIO is based on the definition of 'Residential Complex' given in Section 65(91a) of Finance Act, 1994. It is contended that the activity undertaken by the respondent does not fall within the ambit of exclusion clause given in the definition. Therefore, before deciding the appeal, the exclusion clause given in the definition needs to be examined. The exclusion clause reads as under:

"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 persons use as residence by such person."

Thus, it is clear that not only the residential complex designed or laid out by another person are excluded from the definition but also the ones which are intended for personal use of such person i.e. the owner of the complex. Further, the personal use has been clarified as put to use on rent or without any consideration. In the instant case the 'New Thermal Power Station, Parli' is the 'such person' and the respondent is 'another person'. I find that the staff quarters constructed by the respondent are not covered under the definition of 'Construction of complex' under Section 65(30a) ibid and therefore the activity does not attract Service tax…. "

Determined not to give up, the CCE, Aurangabad is before the CESTAT.

Revenue relies on the definition of 'Residential Complex Services' and the CBEC circular no. 96/7/2007-ST.

The CESTAT observed that the factual findings recorded by the Commissioner(A)have not been contested by the Revenue. Furthermore, it is undisputed that the residential buildings constructed by the appellants are allotted by New Parli Thermal Power Station Ltd. as quarters for residential purposes to their employees.

Holding that the concurrent findings of both the lower authorities are correct and in consonance of law, the Bench rejected the Revenue appeal.

(See 2015-TIOL-2210-CESTAT-MUM)