Service Tax – Construction of residential complex by cooperative housing societies for its members not liable to service tax – Tax paid initially available for refund – Matter remanded to determine unjust enrichment: CESTAT
The two appellants, being cooperative housing societies, are engaged in construction of residential complex for their own / prospective members. The third appellant was a developer engaged by the societies to construct a super structure on the land owned by the societies which were to be transferred to the members of the society. The appellants paid service tax initially and later on filed refund claims on the ground that they are not liable to pay any service tax under the taxable service category of ‘construction of complex’ service. The refund claims were rejected by the lower authorities resulting in this appeal before the CESTAT.
The appellants contended that both the societies as well as developers are not providing any services to another builder or contractor or any firm for construction of a residential complex. 
Relying on Board’s clarification vide letter F. No. 137/12/2006-CX-IV, dated. 29.01.09 and Circular F. No. 332/35/2006 TRU, dated 01.08.06 it was submitted that residences were built and provided to members of societies directly and such transaction was not intended to be taxed at all. The Departmental Representative relied on the decision of the CESTAT in Rohan Builders Ltd. vs. CCE, Bangalore 2008-TIOL-1355-CESTAT-BANG in support of his contention and urged that development includes construction of residential complex and rebutted the contention of the appellants that they were the owners of the properties.
The CESTAT heard the contentions of both sides and observed that in the instant case there is no dispute that the cooperative societies have not taken the service of a contractor for constructing the residential complex and instead chose to construct the residential complex on their own. It was further observed that if no other person is engaged for construction work and the builder/promoter/developer himself undertakes the construction work without engaging services of any other person, then in such cases, in the absence of a client-service provider relationship, the question of providing taxable service to any person by any other person does not arise. Consequently the refund claim of the appellants was allowed subject to the scrutiny of unjust enrichment aspect by the lower authority.
