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Case law on taxability of Residential Complex made for managerial staff
THE PRINCIPAL COMMISSIONER OF SERVICE TAX, BANGALORE Vs NITHESH ESTATES LTD
Service Tax - Construction of Residential Complex Service – assessee entered into agreement for construction of building intended for making available residential accommodation for the managerial staff of M/s. ITC Ltd – Whether the Tribunal erred in coming to the conclusion that the “Residential Complex” constructed by the assessee falls within the meaning of “personal use” under Section 65(91a) of the Finance Act, 1994 and therefore not liable to pay service tax.
HELD - When the sub-Contractor has duly discharged the obligations to pay the Service tax in the present Contract, we are at a loss to understand how the Revenue could again demand the Service Tax from the Respondent-Principal Contractor or the Developer, who did not undertake any construction activity – further, the learned Tribunal was perfectly justified and correct in applying the Circular dated 24/05/2010 and holding that if the Government of India Department could be treated as using the ‘Residential Complex’ constructed by NBCC for its ‘personal use’, how another Corporate body could be denied the benefit of that type of user of ‘Residential Complex’ to be occupied by its Managerial Staff.
The law does not envisage any such distinction among the Private Sector Corporate Entities and the Departments of Government or Government Companies or Undertakings - The case of Revenue have emanated on a misconceived Audit objection raised by the internal Auditors of the Department - the Respondent was not liable to pay any Service Tax on the ‘Residential Complex’ constructed through the sub-contractor and such finding of facts recorded by the Tribunal does not give rise to any substantial question of law – Revenue appeal is dismissed