Co-operative Society eligible for Abatement/exemption of 75% of Service Tax liability: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that a co-operative housing society is eligible for an abatement or exemption of 75% on its service tax liability related to construction services. The case involved a housing society that was providing construction services to its members. Under the service tax regime, there was a provision for a significant abatement (a reduction in the taxable value) for construction services, to account for the value of the land and materials involved. The CESTAT held that co-operative societies undertaking construction for their members are entitled to this benefit. This ruling provides a major relief to housing societies, as it significantly reduces their service tax outgo on construction projects, thereby lowering the overall cost of housing for their members under the old service tax law.