By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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The builders constructing residential complexes on their own land and selling to prospective customers, were not leviable to service tax prior to 01/07/2010.
Facts:
The respondents constructed residential complexes on their land and made agreements for sale of flats and received advance from prospective buyers. As per CBEC Circular, the builders provided no service to any prospective buyers. The activity was covered only after introduction of Explanation to section 65 (105) (zzzh) of the Finance Act, 1994 i.e. with effect from 01/07/2010. The said explanation was prospective and such activity was not chargeable to service tax prior to 01/07/2010 as depicted in the case of Skynet Builders Developers Colonizers and others 2012 (27) STR 388 (Tri.-Del.) The revenue relying on Punjab & Haryana High Court in case of G. S. Promoters vs. UOI 2011 (21) STR 100 (P & H) contended the activities as chargeable to service tax even prior to 01/07/2010 and considered the explanation to be clarificatory.
Held:
The G. S. Promoter’s case (Supra) dealt with the issue of constitutional validity of the Explanation inserted u/s. 65(105)(zzzh) of the Finance Act, 1994 with effect from 01/07/2010 and the case did not examine whether the explanation could have retrospective effect. Following the decision of Skynet Builders (Supra), revenue’s appeal was dismissed.
