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Construction Services Commercial or industrial [Sec 65(105)(zzq)]
Effective upto 30th June, 2012
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Landmark Service Tax Judment - Construction Services – Commercial or industrial

INTRODUCED: With Effect From 10th September 2004
 
Contents
Scope
Exemption
Relevant Notifications / Circulars
Landmark Judgements
Accounting Code
Service Tax 00440290
Interest
00440291
Penalty 00441399
 
DEFINITION:

According to Section 65 (105) (zzq) to any person, by any other person, in relation to commercial or industrial construction is a taxable service;
Explanation.—For the purposes of this sub-clause, the construction of a new building which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorised by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer;

According to Section 65 (25b) “commercial or industrial construction” means—

(a) construction of a new building or a civil structure or a part thereof; or

(b) construction of pipeline or conduit; or

(c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or

(d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit,

which is —          

(i) used, or to be used, primarily for; or          

(ii) occupied, or to be occupied, primarily with; or          

(iii) engaged, or to be engaged, primarily in,

commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams;

 
SCOPE:
TOP

Services provided by any person in relation to construction, repairs, alteration or restoration of such buildings, civil structures or parts thereof which are used, occupied or engaged for the purposes of commerce and industry are covered under this new levy. In this case, the service is essentially provided to a person who gets such constructions etc. done, by a building or civil contractor. Estate builders who construct buildings/ civil structures for themselves (for their own use, renting it out or for selling it subsequently) are not taxable service providers. However, if such real estate owners hire contractor/ contractors, the payment made to such contractor would be subjected to service tax under this head. The tax is limited only in case the service is provided by a commercial concern. Thus, service provided by a labourer engaged directly by the property owner or a contractor who does not have a business establishment would not be subject to service tax.

Post construction, completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry and similar services done in relation to a residential complex, whether or not new, would be included as part of the construction activity of residential complexes for the purpose of levy of service tax.

At present, services rendered for construction of commercial or industrial buildings is taxable. However, construction of roads is not liable to service tax. A point has been raised that if a commercial complex is constructed which also contains roads whether the value of construction of roads would be liable to service tax.

If the contract for construction of commercial complex is a single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the value of construction of roads.

When services provided under a contract consist of a number of different elements, a view has to be taken on the basis of the facts and circumstances of each case as to whether the service provider has made a single overall supply or a supply of different services which are to be treated differently.

Construction of pipeline or conduit has been included within the purview of service tax. Thus, the construction of long distance pipeline which was earlier excluded from the coverage of construction services would now be treated as taxable service. Repair, alteration, renovation or restoration of pipeline or conduit would be liable to service tax.

 
SERVICE TAX EXEMPTIONS:
TOP

(a) Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/- (Service Tax Notification No. 08/2008-S.T., dated 01.03.2008)

(b) Services provided to the United Nations or International Organisations

(c) Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers

(d) Services which are exported as per ‘Export of Services’ Rules

(e) Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.

(f) Services provided by Reserve Bank of India

(g) Out of total value of service provided proportionate value of goods and material provided by the Service Provider

 
SERVICE SPECIFIC EXEMPTION:

1) Taxable value of Commercial or Industrial Construction Service shall be exempt in excess of 33%. In other words, abatement of 67% is available.

2) Commercial or industrial construction service provided in relation to construction of port (authorised) or other than authorised port shall be fully exempt.

 
RELEVANT SERVICE TAX NOTIFICATIONS:
TOP
Service Tax Notification No. 42/2010-S.T., dated 28-06-2010 Exempts certain taxable service of commercial or industrial construction when provided wholly within the airport.
Service Tax Notification No. 38/2010-S.T., dated 28-06-2010 Exempts certain taxable service of commercial or industrial construction.
Service Tax Notification No. 25/2007-S.T., dated 22-05-2007. Exempts commercial or industrial construction service.
Service Tax Notification No. 01/2006-S.T., dated 01-03-2006. To prescribe effective rate of duty.
 
RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES:
Service Tax D.O.F.No.334/03/2010-TRU, dated : 01-07-2010 Issuance of notifications after enactment of the Finance Act, 2010
Service Tax 334/1/2010 Letter D.O.F. No. TRU, dated: 26-02-2010 Changes proposed in service tax law and procedure in Union Budget 2010-11 – regarding.
Service Tax 123/5/2010 -TRU, dated: 24-05-2010 Applicability of service tax on laying of cables under or alongside roads and similar activities – clarification regarding.
Service Tax Circular 80/10/2004 dated 17-09-2004 Clarification of Scope.
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Case Laws Related

  • STO 2014 CESTAT 56
  • Service Tax: Works contract services/ Commercial or industrial construction service, during 01/06/2007 to 31/03/2011 for different departments of several State Governments: Activity of supply and construction of pipelines for supply of drinking water, evacuation of drainage and irrigation: Scope and liability: Since the works contract service provided is towards construction of pipeline falling within sub-clause (b) of Section 65(105)(zzzza) of the Finance. Act, 1994 and the service was provided not for business or industrial purposes but for facilitating Governmental works of drinking water supply, irrigation and drainage, these works and the services provided thereunder are excluded from the purview of works contract service in view of the restricted trajectory of sub-clause (b). The contrary conclusion in the impugned order, that these works fall within sub-clause (e) of Section 65(105)(zzzza), is prima facie unsustainable. This is the prima facie view while granting waiver of predeposit and stay. (Para 2).

    Commercial or industrial construction service: Petitioner have entered into two contracts, with NTPC. One contract is exclusively for supply of manufactured goods and the other is for rendition of services under the composite contract involving incorporation of goods and rendition of services. The two contracts are however and in terms of the contracts thereunder, mutually dependant and connected. The adjudicating authority, on the basis of the Explanation to Rule 3(1) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, computed the value of the transaction covering the two contracts (viz. the supply portion and the goods & services portion) for assessment of service tax, after granting the benefit of the composition scheme. The Explanation to Rule 3(1) of the 2007 rules was introduced vide Notification No. 23/2009-ST dt. 07/07/2009. Execution of the works contract had commenced prior to 07/07/2009 and receipt of the consideration for providing such works contract service to NTPC was also prior to 07/07/2009. The inclusion of the value of the transaction covered by the supply contract for assessing the service tax liability though after granting the benefit of the composition scheme is therefore, prima facie, unsustainable. (Para 3,4,5).

    Partial pre-deposit ordered.

  • STO 2014 CESTAT 37
  • Service Tax: Commercial and Industrial Construction Services to Gujarat State Police Housing Corporation Limited: Demand: Scope and liability: On an identical issue, this bench in the case of Shri D.H. Patel and Shri R.N. Dobariya, vide stay order No. M/13462-13463/WZB/HAD/2013 dated 26.07.2013, granted unconditional waiver to the appellants therein on the similar construction activities. Pre-deposit waived(Para 3).

    Stay granted.

  • STO 2014 CESTAT 2
  • Service Tax: Construction service: Scope and liability: Construction activity does not get covered by the definition of construction service, as appearing under Section 65(30)(a) inasmuch as the building constructed by them does not have more than twelve residential units. Commissioner (Appeals) took into consideration the said additional submissions made by the appellant but did not give any finding to the fact of building having twelve or more than twelve residential units. Commissioner (Appeals) would also take into consideration the decision of the Tribunal in the case of Macro Marvel Projects Limited Vs. Commr. of Service Tax, Chennai reported as STO 2008 CESTAT 369 (Para 2,5).

    Appeal allowed by way of remand.

  • STO 2013 CESTAT 1269
  • Construction Service: Demand: Stay: Appellant had constructed various houses as per the tender floated by the Auda for giving the dwellings to economically weaker sections on a philanthropic purpose: On limitation the appellants found to have made prima facie case in their favor: Waiver from pre deposit granted.

  • STO 2013 CESTAT 1023
  • Commercial or Industrial Construction Service: According to approved plan the applicant had also constructed shops as well as godown which be sold or given on rent by the market committee : Not made out prima facie case: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 1030
  • Construction Service: Railways: Demand: Stay: Railways are not covered under the construction service. Further as per the Indian Railway Act 1989 siding is a part of railway: Pre deposit waived.

  • STO 2013 CESTAT 959
  • Commercial or Industrial Construction Service: Completion and finishing services, repair, alteration or renovation and restoration or similar services provided, whether in respect of a new building or an old building would attract service tax liability under Section 65 (25b).

  • STO 2013 CESTAT 1286
  • Construction Service: Value of material supplied free of cost by service receiver to service provider to be used while providing service: Based on Tribunal’s decision in the case of Jaihind Projects which is against the assessee, directions issued for partial pre deposit.

  • STO 2013 CESTAT 1222
  • Construction Service: Demand: Stay: Issue as to whether the works contract can be vivisected and whether the works contract can be liable to service tax prior to 01.06.2007 has been referred to Third Member as reported in the case of Larsen & Toubro Ltd: As in the case of same appellants on the same issue earlier directions given for 1/3 rd pre deposit: Similar directions for pre deposit made.

  • STO 2013 CESTAT 909
  • Commercial Construction Service: As a result of retrospective amendment by Section 97 & 98 of Finance Act, 2012 on non-commercial constructions no service tax liability on the appellants: Matter remanded.

  • STO 2013 CESTAT 1266
  • Commercial or Industrial Construction Service: Value of free supply materials: Issue pending decision before Delhi High Court: Pre deposit condition waived.

  • STO 2013 CESTAT 958
  • Commercial or Industrial Construction Service: Demand: Stay: Applicant had constructed platform in the open place for platforms of Agricultural Produce Market Committee: Platforms are used to facilitate the sale of cotton by the farmers: Pre deposit waived on prima facie favourable case made out by the applicants.

  • STO 2013 CESTAT 1337
  • Commercial or Industrial Construction: Demand: Stay: Benefit has been denied on the ground that all the contracts commenced prior to March 2008. However, after considering the rules relating to composition scheme and works contract service, we find that the payment of service tax by the appellant as per the composition scheme and filing returns with the department prima facie is sufficient to show that they were eligible during the relevant period: Pre deposit waived.

  • STO 2013 CESTAT 1213
  • Commercial & Industrial Construction Service: Liability of tax attributable to construction of staff quarters, students' hostel etc. for Polytechnic College does not exist, since there is a dispute regarding the payment of service tax claimed to have been made by the appellant, it is appropriate that matter has to be remanded to the original authority for the limited purpose of '''quantifying the correct amount and verifying the payment made by the appellant.

  • STO 2013 CESTAT 798
  • Commercial or Industrial Construction: site formation and clearance, excavation and earth moving and demolition: adjudicating authority treated the entirety of services provided by the appellant as site formation services, outside the purview of commercial or industrial construction service and declined to grant abatement benefits under Notification No. 15/2004-ST dated 10-09-2004: directions issued for partial pre deposit.

  • STO 2013 CESTAT 1164
  • Commercial or Industrial Construction: Construction of Paryatak Bhavan for Andhra Pradesh Tourism Development Corporation: No evidence that Bhavan used largely for non commercial activities: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 1098
  • Commercial or Industrial Construction Service: What is required to be examined in this case is whether the service tax liability arises if both sides agree that the service is liable to service tax or an independent authority can still decide the service is liable to service tax.

  • STO 2013 CESTAT 1076
  • Commercial & Industrial Construction Service: Demand : Stay: Immunity from service tax, interest & penalty on the services provided relating to electricity under Notfn.No.45/2010-ST pleaded for the first time: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 894
  • Construction Service: Demand: Services provided to charitable institution, but no documents produced before adjudicating authority to prove that it was a charitable institute : Construction of Residential Complex: Main contractor has already paid service tax: Matter remanded for verification of evidences.

  • STO 2013 CESTAT 808
  • Construction Service: Demand: Stay: Out of total demand maximum service tax already paid: Pre deposit waived for balance amounts.

  • STO 2013 CESTAT 566
  • 'Commercial or Industrial Construction Service' in respect of construction of residential complex and 'Works Contract Services': Demand: Stay: During the relevant period from 01.04.2008 to 31.03.2009: Appellants did not give option as per Rule 3(3) of Composition Scheme: Directions issued to make partial pre deposit.

  • STO 2013 CESTAT 524
  • Commercial or Industrial Construction Service: Definition requires the construction of the new building or structure to be used primarily for commerce or industry, to be taxable: the agreement between the petitioner and RTMT was in respect of construction of shop for RTMT which were found to have been rented out for commercial purpose by RTMT: Activity/service provided by the respondent - assessee therefore squarely falls within Commercial or Industrial Construction Service as defined in Section 65 (25b).

  • STO 2013 CESTAT 1116
  • Commercial Construction Service: Appellant has rendered services of 'commercial and industrial construction service' during the period October 2005 to May 2007. The appellant had received taxable value in relation to the said services, however, under a bona fide belief as claimed, had discharged the service tax on the value relating to the portion of civil work only under the said category, but did not discharge service tax on the value received in relation to the other ancillary work carried out by them in the said premises. Other works carried out along with civil work would, fall under Clause (c) of the definition of 'commercial or industrial construction services' and hence the appellant is required to pay service tax on the same.

  • STO 2013 CESTAT 577
  • Construction Activity: Government Projects: Construction activity undertaken in respect of National Institute of Industrial Engineering at Powai and National Institute of Construction, Management & Research are construction in respect of educational institutions. Therefore, they cannot be considered as commercial construction attracting the liability of service tax. Similarly, the construction undertaken in respect of MIHAN at Nagpur is in relation to an Airport-Commercial construction does not cover construction relating to roads, railways, airport, etc. and they are specifically excluded from the levy of service tax both under commercial construction service as also under works contract service.

  • STO 2013 CESTAT 500
  • Construction Service: Exemption Notfn.No.1/2006-ST: Exemption would not apply where the taxable service provided is only completion and finishing services, which can be gone into at the hearing of the appeal: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 298
  • Commercial or Industrial Construction Service: Demand : Stay: Agreement not for laying pipes, agreement specifically for manufacture of concrete coated pipes on behalf of M/s China Petroleum Pipeline Bureau as well as for open cut river crossing which includes de-watering, dismantling the cofferdam, restoring the river bed etc: Prima facie case for waiver not made out: Pre-deposit ordered.

  • STO 2013 CESTAT 416
  • Construction Service: Abatement: Value of free supplies material not included: Prima facie abatement admissible: Appellants have paid major amount of Tax: Stay granted from balance amounts.

  • STO 2013 CESTAT 415
  • Construction Service: Demand and Penalty: Construction works carried out by the appellant for Ordinance Factory is not classifiable as 'Commercial or Industrial Construction Services' under the Finance Act, 1994, and accordingly, the demand of tax & penalty confirmed is set aside.

  • STO 2013 CESTAT 218
  • Works Contract: Commercial or Industrial Construction: Demand: Stay: If appellants made to pay service tax under CIC and not WC, they are eligible for abatement of 67% and accordingly liable to pay tax of Rs. 4.50 lakhs, out of which, they have already deposited an amount of Rs.3.68 lakhs: Stay granted from balance amounts.

  • STO 2013 CESTAT 149
  • Commercial or Industrial Construction Service: Service tax on advance payments received: Since admittedly the transaction in issue in the present appeal falls during the period 4.7.05 to 30.6.2006 (prior to introduction of the Explanation to Section 65(105)(zzq) and the service offered by the assessee in relation of WTP cannot be said to be service provided or to be provided to another person, the transaction falls outside the purview of the taxable service.

  • STO 2013 CESTAT 224
  • Commercial & Industrial Construction Service: Demand: Stay: Appellants engaged in providing construction services mainly to Government agencies like Government of Gujarat, Municipal Corporation, National Highways Authorities of India (NHAI) etc. Appellants are also engaged in Road Construction, Wind Farm development, SEZ development etc: Appellants to present their case before the original adjudicating authority to establish that the relevant contracts for which demand was confirmed were with respect to repair and maintenance activity of roads only: Matter remanded.

  • STO 2013 CESTAT 281
  • Construction Service: Demand : Stay: Interior work undertaken by the appellants on 9th floor of the building: Construction of new building or civil structure or part thereof is covered under the scope of taxable service. In respect of repair, alteration, renovation or restoration, it is specifically mentioned that it is in relation to building or civil structure. There is no mention in the definition 'part thereof' in sub-clause (d) of the definition: Prima facie case for waiver found. 

  • STO 2013 CESTAT 407
  • Construction Service: Demand: Stay: Value of material supplied free of cost: Directions issued to deposit balance amount of service tax as no financial difficulty urged by the appellants.

  • STO 2013 CESTAT 192
  • 'Commercial or industrial construction Service': Constructions of viaduct and railway stations for Delhi Metro Rail Project: As per Delhi High Court judgment Delhi Metro Rail is Government Railway as defined in the Indian Railway Act. If that be so, the question of levy of service tax under 'Commercial or Industrial Construction Service' would not arise at all as such construction in respect of Railways stands excluded from the scope of the levy: Prima facie case made out for stay: Stay granted from recovery of pre deposit.

  • STO 2013 CESTAT 138
  • Construction of Roads: Activity of the appellant in construction of roads on BOT basis is not leviable to service tax either under commercial or industrial construction service, works contract service, maintenance, management or repair of immovable property service or under Business Auxiliary Service.

  • STO 2013 CESTAT 162
  • Construction Service: Demand: Stay: Services provided for various Government projects including housing projects: Looking to over all it is found filling of riverfront etc needs to be examined at length: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 215
  • Commercial or Industrial Construction Service: Notfn.No.15/2004-ST: Demand; Stay: On the basis of earlier decision, stay granted.

  • STO 2013 CESTAT 317
  • Construction Service: Demand for the period 2005-2009 when the service tax was payable on the actual receipt and not on amount billed: Various aspects to be looked into with this angle: Matter remanded.

  • STO 2013 CESTAT 663
  • Commercial or Industrial construction: Issue prima facie decided in favour of the appellants that schools and private colleges would not fall within this definition: impugned order an ex-parte order where there is a likelihood that all the defences of the party has not come on record: Demand worked out based on figures in Profit and loss account rather than contract-wise figures where the position regarding supply of free materials for each contract comes out clearly: Matter remanded.

  • STO 2013 CESTAT 247
  • Commercial or Industrial Construction Service: As per CBEC Circular buildings of educational institutions which non commercial in nature not to be taxed: Matter remanded back for verification.

  • STO 2013 CESTAT 33
  • Commercial or Industrial Construction Service: Repair or Road and Construction of Government Quarters: Exempted Retrospectively vide Section 97 and 98 of Finance Act, 2012.

  • STO 2013 CESTAT 124
  • Construction Service: Notification No. 1/2006-S.T.: A building which has already been completed and put to use does not need any completion or finishing services. Therefore, the activities of repair, alteration, renovation or restoration undertaken by the appellant prima facie comes under clause (d) and not under clause (c) and, therefore, the appellant is prima facie eligible for the benefit of Notification No. 1/2006-S.T.

  • STO 2013 CESTAT 58
  • Commercial Construction Service: Demand: Stay: Inclusion of value of materials supplied by service receiver free of cost: Hon’ble Delhi High Court in respect of construction services has granted stays in respect in identical issues of inclusion of free supplied items by the service recipient, in the assessable value of the services provided by the assesses: Stay granted.

  • STO 2013 CESTAT 25
  • Construction Service: Stay: Construction of hospital is a commercial or industrial construction is an arguable point: Stay granted.

  • STO 2013 CESTAT 23
  • Construction Service: Stay: Construction of indoor stadium for sports activities by Pondicherry, Government. According to Board's Circular No.116/10/2009 dt. 15.9.2009 the premises are exigible to tax where they are primarily used for commercial or industrial purposes: Directions issued for partial pre deposit.

  • STO 2012 CESTAT 1135
  • Commercial or Industrial Construction Service: Appellant has undertaken various construction services such as widening of roads, construction of government building, school building, dams, canals and so on. Obviously these activities do not come within the purview of commercial or industrial construction services as defined under Section 65(25b) of the Finance Act, 1994.

  • STO 2012 CESTAT 1143
  • Commercial Construction Service: Construction of stadium or sports complex: Sports Stadia is a public facility for the recreation of the public and it does not come, under the category of commercial or industrial construction.

  • STO 2012 CESTAT 1042
  • Construction Service: Abetment: Value of cement & steel supplied by service receiver not included for paying service tax: However, immediately on being pointed out, the appellants paid service tax along with interest: Penalties set aside by invoking Section 80 provisions.

  • STO 2012 CESTAT 1035
  • Consultancy Service: MD of the appellant company also performed the job of MD of M/s Brembo Brakes India Ltd. for which he was compensated. If at all, any advisory activity was undertaken by the said person, the demand for Service Tax can be made only on him and not on the appellant: Demand set aside.

  • STO 2012 CESTAT 891
  • Construction Service: The correct way of calculating the amount of service tax liability on the appellant on the day when he renders the services and raise the bills and also for amounts received as advance for mobilisation and service tax liability discharged on such advance amount: Directions issued for partial pre deposit.

  • STO 2012 CESTAT 932
  • Commercial & Industrial Construction service: Demand on the basis of difference in figures : Matter remanded: Non inclusion of value of materials supplied free of cost: Pre deposit directions issued.

     

  • STO 2012 CESTAT 1075
  • Construction Service: Considering the fact that building is constructed as hostel for the residence of students studying in medical institute and there is no allegation that the building is being used for any other purpose: Service tax exempted.

  • STO 2012 CESTAT 931
  • Commercial & Industrial Construction service: Short Levy on the basis of difference between figures in ST-3 returns and Balance sheet: Appellants contending that service tax payable on actual receipt, whereas, balance sheet shows accrued income: Matter remanded for reconciliation of figures.

     

  • STO 2012 CESTAT 867
  • Construction Service: Appellants undertaking maintenance service, entire amount received not for providing this service: Directions issued for partial pre deposit.

  • STO 2012 CESTAT 750
  • Commercial Construction Service v/s Works Contract Service: Taxability from 1.6.2007: Appellants did not get themselves registered or pay service tax: Excuse of law cannot be pardoned: Penalty and Limitation upheld.

  • STO 2012 CESTAT 849
  • Construction Service: Works Contract: Input Service Credit: Stay: Large amount of credit earned lying unutilized: Stay granted.

  • STO 2012 CESTAT 754
  • Commercial Construction Service: Show Cause Notice: Revenue cannot argue a case not made in the SCN.

  • STO 2012 CESTAT 736
  • Construction Service: Demand on various activities: All those issues raised by the learned Counsel are to be considered by the adjudicating authority and the same has not been considered by the adjudicating authority due to the reason either that the appellant could not produce relevant evidence in support of their defence or some of the issues were left to be considered by the adjudicating authority.

  • STO 2012 CESTAT 608
  • Construction Service: Commercial or Industrial Construction Service: The terms and conditions of the 'Master Solutions Agreement', in relation to 'site installation services', would clearly indicate that these activities pertaining to 'site installation' for ATMs essentially involved construction of civil structures and allied amenities required for the installation of ATMs : Pre deposit ordered.

  • STO 2012 CESTAT 598
  • Construction Services: Stay: Value of the free supply materials requires to be added to determine the gross receipts and that the assessee is eligible for Notification No.1/2006 and, therefore, 67% abatement shall be available in respect of the gross receipts which includes the value of free supply materials: Directions issued for making pre deposit. 

  • STO 2012 CESTAT 1129
  • Construction Services: Leviability of service tax on construction of Residential complex cannot depend on economic status of the ultimate beneficiaries/residents. Prima facie, service tax is leviable on construction of residential complexes for low-income groups of people. Residential units were constructed as two-storied blocks, each consisting of less than 12 units. It is debatable as to whether these complexes can be considered to be residential complexes for the purpose of levy of service tax. Pre-deposit waived and stay of recovery granted.

  • STO 2012 CESTAT 508
  • Construction Service: Works Contract Service: Prima facie case not made out: Directions issued for making pre deposit.

  • STO 2012 CESTAT 418
  • Commercial or Industrial Construction Service: Stay : Appellants registered under Rajasthan Socieities Act, 1958 and imparting education to poor on no profit no loss basis prima facie covered by Board’s Circular dated 17.9.2004: Waiver from pre deposit granted.

  • STO 2012 CESTAT 419
  • Construction Service: Services provided to educational institutes registered with Rajasthan Societies Act: Not for commercial use: Case for waiver made out.

  • STO 2012 CESTAT 609
  • Commercial construction activity: laying of long distance water pipeline is not covered under the category of Commercial or Industrial activity: Stay granted.

  • STO 2012 CESTAT 452
  • Construction Service: service tax is liable to be paid on actual amounts received and not on amounts which may be receivable and not yet received. 

  • STO 2012 CESTAT 385
  • Construction Service: Benefit of Notfn.No.1/06 denied on the ground that service receiver had supplied free of cost cement and steel: Stay granted to similarly placed assessees in other cases: Stay granted.

  • STO 2012 CESTAT 243
  • Commercial & Industrial Construction Service: Abatement: Value of free supply materials to be included in the value as per Service Tax Rules which came into effect from 18.4.2006: Directions issued to make pre deposit.

  • STO 2012 CESTAT 257
  • Commercial Construction Service: Works Contract Service: Averment that before 1.6.2007 the appellants were paying service tax under Commercial Construction service not factually true as appellants came into existence after 1.6.2007: Matter remanded.

  • STO 2012 CESTAT 250
  • Commercial or Industrial Construction Service: Advance payments received from purchasers of flats/shops before 1.7.2010: Explanation appended is prospective and not applicable to contracts entered and payments received prior to 1.7.2010: Based on ratio of similar judgments, stay granted from recovery. 

  • STO 2012 CESTAT 202
  • Construction Service: Construction of roads exempted from ST retrospectively: Construction of parks would not fall under this service: Looking to over all facts stay from recovery of ST granted.

  • STO 2012 CESTAT 94
  • Commercial Construction Service: Construction of Toll Plaza not at par with Construction of Road.

  • STO 2012 CESTAT 78
  • Commercial or Industrial Construction Service: Finishing services like False ceiling, partitions, flooring, modular system, painting, carpeting, wall panelling and interior decorator services having been brought to the commercial or industrial services from 16.6.2005 are not covered by the definition for the earlier period.

  • STO 2012 CESTAT 111
  • Construction Service: Laying of pipeline: water supply project is an infrastructure facility and a civic amenity which the State provides in public interest and not an activity of commerce or industry: GTA Service: Abatement of 75% admissible to the appellants: Appeal allowed.

  • STO 2012 CESTAT 41
  • Construction Service: Service provided to MHADA for construction of buildings for re-development of poor people on the funds provided by Central Government & State Government not a commercial activity, hence not taxable: For services provided to BSNL and MTDC the same is commercial in nature but taxable from 10.9.2004: Directions issued for partial pre deposit looking to the financial difficulties raised. 

  • STO 2012 Bom 429
  • Commercial or Industrial Construction Service: Construction of Residential complex: Constitutional validity of the explanation inserted into clauses (zzq) and (zzzh) of Section 65(105) and of clause (zzzzu) assailed: No merit found in challenge. 

  • STO 2012 CESTAT 5
  • Commercial or Industrial Construction: Demand: Activity of laying of commissioning of sewage pipeline which includes excavation, construction of inspection chambers and other civil works which necessitated laying of pipeline not for commerce or industry, hence, not taxable. 

  • STO 2011 CESTAT 322
  • Service Tax: Construction of Complex Service or Commercial or Industrial Construction Service: Demand: Stay petition and waiver of pre-deposit: The period involved in the current appeal is from 1.4.2008 to 31.3.2009.It is already established that the services rendered by the appellant would be taxable from 1.7.2010 only and any demand prior to that period is not sustainable. Waiver of pre-deposit is allowed and stay on the recovery till the disposal of the appeal.(Para 5)

  • STO 2011 CESTAT 189
  • Service Tax: Commercial or industrial construction service, "Construction of complex service and Works contract service: Demand: Waiver of pre-deposit: There is merit in the department's contention that the services provided by the appellant were taxable even during the period prior to 1.6.2007 on which admittedly, no Service Tax has been paid, as such the appellant have not established a case in their favour. Therefore, this is not a case for total waiver. On the payment of this amount within the stipulated period, the requirement of pre-deposit of the balance amount of Service Tax, interest and penalty would stand waived and recovery thereof stayed till the disposal of the appeal.

  • STO 2011 CESTAT 268
  • Service Tax: Classification: Commercial or Industrial Construction Services: Falling of a particular activity under appropriate clause needs thorough examination in respect of each work order. Therefore, dispensing with requirement of pre-deposit remit the matter back to the learned original authority to examine the pleadings and evidence of the appellants and materials on record and dispose the matter expeditiously granting fair opportunity of hearing. (para 6,7)

  • STO 2011 CESTAT 238
  • Service Tax: Commercial and Industrial Construction Service: Notification No. 12/2003-ST dated 20.06.2003: Remand: In the interest of justice, having due regard to the Hon’ble High Court order, have taken this additional evidence on record with a view to avoiding delay of administration of justice in the case. Both sides agree that the responsibility to examine these documents is with the original authority. Therefore, are inclined to remand case to that authority for expeditious de novo adjudication of the matter. (para 3)

    Service Tax: Commercial and Industrial Construction Service: Applicability of Circulars: Remand: It appears; the learned Commissioner considered the circular dated 23.8.2007 to be of retrospective operation to cover the period of dispute in this case. One of the contentions which apparently escaped the attention of the learned Commissioner was an “oppressive” circular should be given only prospective effect and that the benefit of a previous beneficial circular must be given to the assessee. In the results, the impugned order is set aside and this appeal is allowed by way of remand. (para 4,5)

  • STO 2011 CESTAT 197
  • Service Tax: Erection, Commissioning and Installation Services or Commercial and Industrial Construction Services: Demand: Classification: Waiver of pre-deposit: The definition of Commercial or Industrial Construction services under Section 65(25b) of the Finance Act, 1994, wherein construction of pipeline or conduit has been specifically mentioned. The appellant herein is a sub-contractor engaged for construction of such pipeline or conduit. The said activity would have been taxable but for the exclusion given by the very same definition which is in respect of bridges, tunnels and dams. It is a common knowledge that the mega power projects which are installed are at the end of the dam in order to generate power by optimally using the water stored in the dams. Therefore, the application for the waiver of pre-deposit of the amount involved is allowed and recovery thereof stayed till the disposal of the appeal.

  • STO 2011 CESTAT 205
  • Service Tax: Management, Maintenance or Repair Service: Demand: waiver of pre-deposit and stay of recovery: Works Contract could not be taxed under another head prior to 01.06.2007. Demand of service tax made is contrary to the ratio of the decisions of the Tribunal and the High Court cited by the appellant.(Para 5). Complete waiver of the dues was ordered and stay on recovery thereof pending decision in the appeal.(Para 6)

  • STO 2011 CESTAT 280
  • Natural justice: Matter decided without hearing the appellants: Pre-deposit waived, matter remanded back.

  • STO 2011 CESTAT 394
  • Service Tax: Demand: Taxable service: Taxability: Ministry vide letter F. No. B1/6/2005-TRU dated 27.07.2005 clarified that “prior to 16.6.2005, maintenance or repair carried out under a maintenance contract or agreement was covered service tax. Repair or servicing carried out under a contract other than a maintenance contract or agreement was nit covered within the purview of service tax. Maintenance or repair including reconditioning or restoration or servicing or any goods or equipment, except motor vehicle (Which is taxable under the category of authorized service station), undertaken as part of any contract or agreement (not necessarily maintenance contract or agreement) is now liable to service tax under this category of service. To attract service tax under this category contract or agreement need not necessarily be a maintenance contract / agreement.”(Para 6,12). The service provided by the Appellant during the period under dispute was covered by the definition of taxable entry in force at that time. This clarification which came in July 2005 cannot be reason not to declare the value of taxable services from July 2003 and therefore, argument on limitation are not sustainable.(Para 12). Partial deposit ordered and subject to this, deposit of balance amounts due under the impugned order is waived and there shall be stay on collection of such, amounts during the pendency of the Appeal.(Para 13.) 

  • STO 2011 CESTAT 27
  • Service Tax: Commercial or Industrial Construction Service: GWSSB not a commercial organization: The responsibility of the Board is rapid development and proper regulation of water supply and sewerage services and not commercial or industrial activity. Under these circumstances, how can GWSSB be considered as a commercial organization or the purpose of pipeline laid for them by various contractors as one for commerce i.e. to say to buy and sell water. The name of the scheme for which pipeline was laid was also Mehsana District Water Supply Scheme. (para 16)

    Service Tax: Commercial or Industrial Construction Service: Pipeline not used for commerce or industry: The purpose is supply of water to the needy citizens of the State. The term used for commerce" would mean that only purpose would be buying and selling, which is definitely not the case here. The term used primarily for commerce would mean that primary purpose should be buying and selling and the other purposes also may be served incidentally. In this case, purchase and sale of water are incidental and the main purpose is supply of water to needy citizens of the State. (Para 17)

  • STO 2011 CESTAT 20
  • Service Tax: Commercial or Industrial Construction Service: Cenvat Credit not to be availed as per  Notification No. 1/2006-ST, dt. 1.3.2006. : It is seen that during the course of proceedings, the appellants submitted before the adjudicating authority that such utilization of MODVAT Credit was by way of mistake on the part of the clerk handling the job. They had reversed the CENVAT Credit 2,79,645/- as also the interest on the same amounting to Rs. 3600/-. Prima facie, find merits in the applicant’s contention and accordingly dispense with the condition of duty, penalty. (para 3,4)

    Service Tax: Commercial or Industrial Construction Service: Cenvat Credit not to be availed as per  Notification No. 1/2006-ST, dt. 1.3.2006. Appeal filed by Revenue : The Stay Petition filed by the Revenue is against that part of the order of the Commissioner (Appeals), vide which he has dropped on the same ground by observing that during the said period, the appellant did not utilize the MODVAT Credit and such, benefit of Notification cannot be denied to them. No infirmity in the views adopted by the Commissioner (Appeals) and accordingly reject the Stay Petition filed by the Revenue. (para 5,6)

  • STO 2011 CESTAT 56
  • Service Tax: Commercial or Industrial Construction Services: Remand: Since the adjudication order is silent on the exact services rendered by the assessee, consider it fit to set aside the impugned order, keeping all the issues open, remand the matter back to the Adjudicating Authority to reconsider the issue afresh within the allegations raised in the show cause notice, after following the Principles of Natural Justice. (para 5)

  • STO 2011 CESTAT 1
  • Service Tax: Cenvat Credit: Construction and renting of immovable property: Pre-deposit: The arguments advanced and discussed above would show that the issue is of interpretation and also of admissibility of Service Tax paid on various services and require detailed consideration of the relevant rules as well as precedent decisions on the subject. Under these circumstances, the amount of approximately Rs.2 lakhs already deposited by the appellant is sufficient for the purpose of pre-deposit. (para 4,5)

  • STO 2010 CESTAT 479
  • Commercial Construction Service: Value of free materials supplied: Stay granted.

  • STO 2010 CESTAT 521
  • Consulting Engineer’s services: Looking to the change in the legal position about liability of appellants to pay service tax for period prior to amendment in Rule 6 : Matter remanded.

  • STO 2010 CESTAT 410
  • Commercial Construction Service: Value of material supplied free not included: Benefit of Notfn.No.15/2004-ST in dispute: On the basis of judgments of Courts Prima facie case made out for waiver.

  • STO 2010 CESTAT 563
  • Construction Service vis-à-vis Works Contract: Stay granted as various issues are debtable but there are decisions in favour of the appellants.

  • STO 2010 CESTAT 600
  • Service Tax: Waiver of pre-deposit and stay of recovery: Commercial or Industrial Construction' Service and 'Construction of Complex' Service: Demand: The deeming provision contained in the explanation added to Section 65 (105) (zzq), and (zzzh) of the Finance Act, 1994 will have only prospective effect from 1.7.2010. Apparently, prior to, this date, a builder cannot be deemed to be service provider providing any service in relation to industrial/commercial or residential complex to the ultimate buyers of the property. Admittedly, the entire dispute in the present case lies prior to 1.07.2010. The appellant has made out prima facie case against the impugned demand of service tax and the connected penalty. The appellant paid an amount of over Rs. 64 lakhs, which stands appropriated towards the impugned demand of tax.(Para 5). In the circumstances, there shall be waiver of pre-deposit and stay of recovery(Para 6). 

  • STO 2010 CESTAT 462
  • Construction Service: Value of goods not to be included: Prima facie case made out. Stay granted.

  • STO 2010 CESTAT 434
  • Service Tax: Commercial or Industrial Construction Service: Laying of pipeline for supply of water for Gujarat Water Supply and Sewerage Board is not taxable under Commercial or Industrial Construction service. Sale of water is not the primary function of the Board It is also clear that the water purchased by the Board is being distributed to rural and urban areas for the purpose of irrigation and drinking at different rates which are subsidized and even the operating cost also does not stand recovered by them.

    Commercial Activity: To setup an establishment for water supply is a part of the duties and functions of the State to provide its citizens with a better living. In these circumstances, it cannot be held that laying of pipelines for the Board is for the purpose of undertaking any commercial activities by the Board, and the appellant would be covered by said services by making him liable to payment of service tax. Second limb of definition of Commercial or Industrial Construction service do not stand satisfied, it is held that the services provided by the appellants are not covered under the said services and no service tax is required to be levied.

  • STO 2010 CESTAT 258
  • Service Tax: Commercial and Industrial Construction: Construction of Road: Refund: It is an admitted fact by both the sides that the construction of road does not require payment of service tax. Whether the road is being constructed for public utility purpose or as a part of a commercial complex is not relevant, in terms of the Board's Circular above. No infirmity in the view adopted by Commissioner (Appeals), in as much as the contract in the present appeal is admittedly for construction of road only. (para 7)

    Service Tax: Commercial and Industrial Construction: Construction of Road: Refund: Unjust enrichment: Commissioner (Appeals) has referred to the fact that no separate service tax has been shown in the invoices raised against their claim. A certificate stands produced by M/s. BPCL, who is a public sector undertaking to the fact that no service tax has been paid by them. Chartered Accountant certificate also is to the effect that no service tax has been received by the appellant. In these circumstances the bar of unjust enrichment would not get attracted. (para 8)

  • STO 2010 CESTAT 367
  • Service Tax: Consulting Engineers Service: Survey and Map-making Services: Pre-deposit: Prima facie the activities undertaken by the appellants are classifiable under ‘Survey and Map-making Services’. By virtue of definition of SMS in the Act, the impugned activities carried out by the appellants for the Government department were not exigible under that entry. The appellants have made out a strong prima facie case for waiver of pre-deposit of the dues adjudged. (para 4)

  • STO 2010 CESTAT 252
  • Service Tax: Consulting Engineers’ Service: The mandate of law being that the consideration received for the service provided from the effective date of commencement of the law shall be taxable; the appellant's case was before commencement of the law to tax a Consulting Engineering Service. Finding no evidence on record to show that Consulting Engineering Service was provided during the impugned period and also relying on the decision of the Tribunal, the appeal of the appellant is allowed. (para 3)

  • STO 2010 CESTAT 358
  • Service Tax: Commercial or Industrial Construction Service: Penalty: Ingredients for imposing penalty:  There is no finding of suppression or intent to evade payment of service tax due by the assessee in the order of the original authority. The revisionary authority did not gather any fresh evidence of assessees’ conduct. The lower authority did not reliably find that that the appellants were guilty of fraud, suppression of fact or willful mis-statement with intent to evade payment of duty. The appeal is allowed. (para 6,11,12)

  • STO 2010 CESTAT 286
  • Service Tax: Commercial or Industrial Construction Services: Laying of pipelines for Gujarat Water Supply and Sewage Board: No commercial or industrial activity: As per the Gujarat Act, GWSSB is constituted mainly to ensure supply of drinking water and maintenance of sewerage system in the in the jurisdiction of the said Board. The Board is run by substantial amounts released by the State Government as grant every year. These facts show that the pipelines in question were not laid to facilitate any commercial or industrial activity. The impugned order is set aside and appeal allowed. (para 9,11)

    Service Tax : Works Contract: Composite contract cannot be vivisected: The Commissioner accepted that the contract involved was a composite contract. While demanding tax on construction service being part of the composite contract, the adjudicating Authority had vivisected the composite contract and found part of it liable to service tax. The impugned demand on ‘construction service’ is contrary to the ratio of the Tribunal’s decision in Diebold Systems (P) Systems (P) Ltd. Vs. CCE, case (supra). (para 10)

  • STO 2010 CESTAT 319
  • Service Tax : Notfn. 15/2004-ST dated 10.09.2004: Option available with the assessee : Cenvat Credit : If the appellants do not avail of the exemption, the appellants would be eligible for the benefit of Cenvat credit on the inputs and capital goods and also will be eligible to exclude the value of goods sold by him. He also would be eligible to avail Cenvat credit so long as he has the duty paying documents and it has to be remembered that the rules do not require that he should have discharged the burden of duty himself for the purpose of availment of Cenvat credit. (para 26)

    Service Tax: Notfn. 15/2004-ST dated 10.09.2004: Object of Explanation: Therefore, the explanation is really in nature of explanation and brings clarity to the provisions of notification and it is the choice of the assessee to avail exemption or not. The objective of the explanation and the proviso is to ensure that in different situations, the liability of Service tax would remain the same and it is very difficult to find fault with this objective. (para 25, 27)

    Service Tax : Notfn. 15/2004-ST dated 10.09.2004: Meaning of “supplied”, “provided” and “used” : By using the word “or” between the words “provided” and “used”, legislative intent seems to be to ensure that whether it is supplied or provided or used, the value of such goods and materials irrespective of source are to be included. Section 67 and the provisions of Valuation Rules requires all types of monetary and non-monetary considerations to be taken into account to arrive at the value of service provided. (para 28)

    Service Tax: Commercial or Industrial Construction Service: Notfn. 15/2004-ST dated 10.09.2004 : Tax on 33% of Gross Amount : Supply of pipes by the receiver which is an essential component and is essentially required for providing pipeline laying service, has to be treated as consideration other than in the form of money and therefore the value has to be included. Rule also provides that if such value cannot be determined, service provider has to determine equivalent money value of such consideration. Unless the goods are sold i.e. to say separate invoices are raised indicating the value of the goods and taxes payable thereon by the service provider to the service receiver, the benefit of Notification No. 12/03 cannot be availed. (para 24, 30)

    Service Tax: Commercial or Industrial Construction Service: Suppression : Penalty: The matter in this case is of interpretation of law and the appellants cannot be found fault with for entertaining a view that value of pipes need not be included and claiming on the basis that they are eligible for exemption. Unable to agree with the view taken in the impugned order that the suppression has been correctly invoked. Accordingly, penalty should not have been imposed under Section 78 of Finance Act, 1994.(para 33)

    Service Tax: Erection, Commissioning & Installation Service: Sand blasting, painting, coating and wrapping of the pipelines: Penalties : The appellants do not want to make an issue out of it since the service receiver has taken the credit. It would be sufficient if the appellants pay the interest payable on the amount of Service tax which they have undertaken to pay. Penalties under various Sections of Finance Act, 1994 in relation to this demand are set aside by invoking provisions of Section 73 and Section 80 of Finance Act, 1994. (para 35)

    Service Tax: Commercial or Industrial Construction Service: Notfn. 15/2004-ST dated 10.09.2004: Tax on 33% of Gross Amount : Remand : The original adjudicating authority shall issue a notice duly revising the duty payable in terms of this order and other proposals and issue notice to the appellant. It is made clear that the notice would be as per the conclusions drawn in this order. The appellants would be free to exercise their option to pay Service tax as per exemption notification or as per any other relevant provisions/notification applicable to them. (para 37)

  • STO 2010 CESTAT 242
  • Service Tax: Works Contract Vs. Sale: The assessee had paid service tax of an amount of Rs.79,454/- under the category of works contract. Assessee had collected from their customers only the sale value of Anodized Aluminium extrusions. Therefore the taxable value of the service rendered was 'nil' during the material period and assessee were eligible for the refund of service tax they had paid during the material period. Stay Application filed by revenue is rejected.

  • STO 2010 CESTAT 243
  • Service Tax: Sub Contract: Non Speaking Order: Matter Remanded Back: The appellants were sub-contractors and their plea that the main contractor has discharged the service tax liability on the entire service rendered and as sub-contractor, they are not liable to pay service tax was not addressed. The impugned order is a non-speaking order on the point raised by the appellant, resulting it to be set aside and matter is remanded back.

  • STO 2009 CESTAT 1505
  • Service Tax: Whether railway has been excluded from the liability under commercial and industrial construction services: Scope: Whether the warehouse complexes constructed by the appellants on Railway side against the award of contract by the Central Warehousing Corporation, an undertaking of Government of India, the appellants are covered in the category of Commercial and Industrial Construction Services or not. According to the Board Circular no. 80/10/2004-ST dated 17.9.2004, building civil structure or parts thereof which are used, occupied or engaged for the purpose of commerce and industry are covered by levy of service tax. According to above clarification, construction of warehousing complex, warehouse, cold storage, markets, bazaars etc. are covered under commercial and industrial construction services and contractors executing such work, either for Govt., Semi Govt. or local bodies are liable to pay service tax on such construction. It was further clarified that such construction which are for use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government constructions would not be taxable. However, if such constructions are for commercial purposes like local government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to service tax.(Para 4).

    Appeal rejected.

  • STO 2009 CESTAT 1575
  • Service Tax: Commercial or Industrial Construction Services: Activity in laying of long distance pipe lines for distribution of water for Government of Gujarat Water Supply and Sewerage Board (GWSSB) : Scope and liability: In an identical issue in the case of M/s Nagarjuna Construction Company Ltd. Vs CCE, Hyderabad, this Bench has granted unconditional stay by Stay Order No. 401/2009 dated 25.03.2009. The Gujarat Water Supply & Sewerage Board (GWSSB) have been established under the Gujarat Act No. 18 of 1979 for rapid development and proper regulation of drinking water supply and sewerage services in the state of Gujarat. The GWSSB primarily executes water supply and sewerage works for the benefit of both the rural and urban communities, excluding the municipal corporations. It is very clear that the Board primarily executes water supply and sewerage works for the benefit of both the rural and urban communities excluding the municipal corporations. The water is supplied at highly subsidized rate. In view of these circumstances, the activity of laying of pipelines for the said Board by the appellants cannot be considered as services of ‘commercial or industrial construction’. Prima facie, appellants have made out a strong case on merits. (Para 5).

    Stay granted.

  • STO 2009 CESTAT 1434
  • Service tax: Clearing activity under Section 65(24b) of the Act, in the temples at Tirupathi: Scope and liability: The activity undertaken by the appellants viz. clearing activity of Section 65(24b) of the Act is taxable only if such activity is undertaken in commercial or industrial buildings and premises thereof, plants, or machinery, tank or reservoir of such commercial or industrial premises thereof. In the instant case, the premises in which the impugned activity was undertaken by the appellants are buildings maintained by the Tirumala Tirupathi Devasthanam for providing accommodation to pilgrims visiting the temples at Tirupathi Therefore, the impugned activity cannot be legally classified as taxable service specified under Section 65(24b) of the Act.(Para 1,2).

    Stay granted.

  • STO 2009 CESTAT 1408
  • Service Tax: Construction of Complexes Service: Cost of land whether includable in taxable value: The issue involved in this case is regarding inclusion of land for the computation of value for the discharge of service tax liability. This issue has already settled by this Bench in various maters and, hence, the applicant has made out a prima facie case for the waiver of the pre-deposit(Para 2).

    Stay granted.

  • STO 2009 CESTAT 1333
  • Service Tax: Commercial or Industrial Construction Service" for the period 16.6.05 to 31.3.08 rendered to GIDC: Tax liability: The appellants have stated that GIDC is a nodal agency of the Government of Gujarat playing a major role in providing infrastructure etc. It is stated that as per Section 37 of the Gujarat Industrial Development Act, 1962 GIDC is empowered to lay down, maintain, repair pipe/pipelines, conduits for the purpose of constructing any sewers or drains necessary for carrying any waste liquids of an industrial process through the said area. GIDC was not acknowledged as an industry. However, in the present appeal itself, the appellants have acknowledged GIDC to be a corporation primarily undertaking development of infrastructure for industries. This dichotomy would dislodge the appellants ' claim of bona fide belief. Moreover, in the service tax returns filed by them during the material period, they did not disclose the amounts collected by them from GIDC. Appellant argued that the service provided to GIDC was not taxable and hence not reflected in their ST-3 Returns. The service rendered to GIDC is a taxable service and service tax ought to have been paid. It appears that huge amounts were collected from GIDC as consideration for service which was rendered to them and was suppressed in the service tax returns. There appears to be suppression of material facts and, therefore, at this stage, invocation of extended period of limitation is justified.(Para 5,9).

    Pre-deposit ordered.

  • STO 2009 CESTAT 1416
  • Service Tax: Services of constructing commercial and residential premises for the period 10.09.2004 to 31.03.2007: Works contract: Liability: The issue regarding the taxability of services rendered by applicant, prima facie seems to be contentions are one and needs to be gone in to detail. The amount already deposited by the applicant is enough deposit to hear and dispose the appeal.(Para 4).

    Balance pre-deposit waived, stay granted.

  • STO 2009 CESTAT 1177
  • Service Tax: Clearing and Forwarding Agent: Period of limitation: The Revenue is not disputing that the appellant approached to the department in 2004 but submits that the period is prior to the said intimation, during which there was no correspondence between the respondents and the Revenue. However, it is seen that even after the respondents approached department in 2004, they were not advised to pay tax and show cause notice was issued on 02.9.2005. Department itself was not clear and that is the reason that their request for clarification made in 2004 was not replied to. In such a case, demand having been raised beyond the normal period of limitation is barred by limitation(Para 2).

    Revenue appeal rejected.
     

  • STO 2009 CESTAT 1185
  • Service Tax: Commercial and industrial construction: Abatement under Notf. No. 12/03: Scope: The benefit is not available to the Noticee as they have been providing only completion and finishing services in relation to building or civil structure. Thus, the benefit under Notification No.12/2003-ST dated 20.06.2003 or Notification No.15/2004-ST dated 10.09.2004 as amended and 1/2006-ST dated 01.03.2006 could not be extended to the Noticee. Merely on the basis that the Noticee has composite contracts, the benefit under the notifications supra could not be extended to them in the absence of fulfilment of conditions laid down therein. It can be reasonably deduced from the fact that the abatement of 67% denied in the notifications for completion & finishing services, is due to the fact that majority of goods/materials necessary for construction e.g. cement, steel etc. are not required for such services. To grant 67% abatement to completion & finishing services will not be equitable in law and denial the benefit of abatement.(Para 6).

    Pre-deposit ordered.
     

  • STO 2009 CESTAT 1150
  • Service Tax: Commercial or industrial construction service for 10/09/04 to 31/03/07: Scope and liability: When finishing service came into statute book, that has been rightly considered by the Authority below and without taxing the material, service portion has been taxed. This is very clear when the Commissioner has made working under paragraph 40 of order-in-original. Looking to the definition of the law w.e.f. 16/6/05, part of the demand may not survive at this stage except for the subsequent period.(Para 4,5.1).

    Pre-deposit ordered.

  • STO 2009 CESTAT 1152
  • Service Tax: Industrial construction service: Scope and liability: In respect of time bar, applicants were registered with the Revenue authorities as provider of taxable service. However, applicant had not filed any return. Therefore, in absence of return, revenue was not aware whether applicant has provided any taxable service or not. Therefore, the demand is rightly made after invoking the extended period. Applicants produced sample copies of the contract to show that applicants are not providing industrial construction service. The applicant had submitted that almost 50% of the contracts are in respect of Industrial construction. Further, the issue regarding taxability of the service is not contested by the applicant before the adjudicating authority.(Para 8.9).

    Pre-deposit ordered.

  • STO 2009 CESTAT 1010
  • Service Tax: Building of commercial and residential apartments/buildings: Commercial or Industrial Construction Service: Scope and liability: The issue is covered by the Board's Circular No. 108/02/2009-STdated 29.01.2009 . Accordingly, it is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the properly gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self Service' and consequently would not attract service tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter/builder/developer; who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of 'residential complex'. The issue also involves commercial property however, applicants had already discharged the Service Tax liability to that extent. As part of the amounts had already been deposited, waiver of pre-deposit allowed(Para 5, 5.1).

    Stay granted.

  • STO 2009 CESTAT 654
  • Service Tax: Construction of commercial complex service: Scope: The right and interest over the immovable property being subject to the transfer of Properties Act, the Appellant cannot sell the leased property without the permission of the Jaipur Development Authority. When the land itself cannot be sold, certainly the commercial complex construction is an arrangement entered into by the appellant with the prospective buyer. Both the sides are under confusion as to the nature of levy and whether Service Tax can be attracted in the present case.(Para 2,4).

    Pre-deposit ordered.

  • STO 2009 CESTAT 620
  • Commercial Training or Coaching Service : The students from Engineering Institutions had visited the appellant's factory for learning the various activities in the factory and some amount was collected from each student for utilizing the facilities. There is absolutely no 'Commercial Training or Coaching Service' given by the appellant's unit. Availing the, facilities in the appellant's unit by the students, by no means, can be equated to rendering 'Commercial Training or Coaching Service'.

  • STO 2008 CESTAT 551
  • Service Tax: Service of construction: Cost of supply of free material: Hon'ble Madras High Court in the case of Larsen & Toubro Ltd. vs. Union of India reported in STO 2007 Mad 327 and Hon'ble Delhi High Court in the case of Era Infra Engineering Ltd. vs. U.O.I. reported in STO 2008 Del 71 were held that the gross amount charged shall not include the free supply of the material by the recipient of the service for the purpose of determination the taxable service, in terms of the Notification No. 15/2004-S.T. dated 10-Sep-2004.

    Stay allowed.

  • STO 2008 CESTAT 572
  • Service Tax: Commercial or industrial construction service: Scope: Commercial or industrial construction includes construction of a new building or a civil structure. In the present case only ground water reservoir has been constructed and the capacity of another reservoir has been increased and the reservoir is a water body and this fact is admitted by the adjudicating authority in para '7.8' in the adjudication order. The contention is that the water bodies are excluded from the scope of “site formation and clearance, excavation and earth moving and drilling” service is as per the provisions of Section 65 (97 A) of the Finance Act, the service of site formation and clearance excavation and earth moving and drilling, digging the reservoir for repairing, renovating or restoring of water source or water bodies are excluded from the service of site formation.(Para 2,4).

    Pre-deposit waived, stay allowed.
     

  • STO 2009 CESTAT 209
  • Service Tax: Commercial or Industrial Construction Service, for construction of new retail outlets: Demand and penalty u/s 78: Scope and liability: The entire service tax liability was paid by the respondents along with interest before the issuance of the show cause notice and obtained the registration for payment of service tax, when they were being investigated by the DGCEI officers. They were also filing service tax returns regularly after obtaining the registration. The Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa, 25 STC 211 (SC) has held that the penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation, is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. (Para 9,10). The Commissioner (Appeals), in the impugned order, has reduced the penalty to Rs.10,000/- taking cognizance of Section 80 of the Finance Act, 1994. The Hon'ble Bombay High Court in the case of Commissioner or Central Excise and Customs Vs. Ashish Vasantrao Patil reported in STO 2007 Bom 1025 dismissed the appeal of the Revenue holding that the penalty was reduced by the Tribunal by the Order dated 15.2.2006 STO 2006 CESTAT 11 exercising discretion and recording reasons therefor under Section 80 of the Finance Act, 1994. Similarly, the Hon'ble Bombay High Court in the case of Commissioner of Service Tax vs. Lark Chemicals reported in STO 2007 Bom 1182 observed that the High Court in similar cases held that Section 76 ibid is subject to Section 80 ibid and discretion to reduce the penalty exists. (Para 11,12).

    Revenue appeal rejected.

  • STO 2009 CESTAT 451
  • Service Tax: “Commercial and Industrial Construction Service” for the period 10.09.2004 to 30.09.2005: Taxable value: Whether cost of cement and steel supplied by service recipient is includable in the "gross value charged": Scope and liability: The Explanation added to Notification No. 15/2004-ST dated 10.09.2004 by Notification No.4/2005-ST dated 01.03.2005 is retrospective in operation. The question now is as to how the expression ‘used’ can be understood. The three expressions ‘supplied', ‘provided’ and ‘used’ occurring in the text of the Explanation are separated by the word “or”. It is pertinent to note that the phraseology used in the Explanation is not “supplied, provided or used". It appears, in this situation, the principle of ejusdem generis cannot be applied to the expression used. Prima facie, the interpretation offered by the appellant seems to be consistent with the legislative intent underlying the relevant statutory provision (Section 67 of the Finance Act, 1994). Accordingly, for the present purpose, the expression ‘used' so as to mean "supplied and used by the service-provider" for purposes of the present case, wherein cement and steel were supplied by the service recipient and used by the appellants as part of rendering of the taxable service in question. In this view of the matter, the appellants were not liable to include the cost of cement and steel in the "gross value charged" for the purpose of determining the service tax liability under Notification No.15/2001-ST(Para 2).

    Stay granted.

  • STO 2008 Del 71
  • Valuation: Raw material received free: Based on prima facie view taken by the Madras High Court in the case of Larsen & Toubro Limited, the adjudicating authority asked to proceed with the adjudication of show cause notice without including for the purposes of determining the taxable service the supply of free material to the Petitioner

  • STO 2008 CESTAT 243
  • Royalty: Service tax has been demanded on royalty paid for licence to use know-how, treating it as consulting engineer services. Issue covered by decisions of Tribunal in the case of Bajaj Auto Ltd and Ispat Industries Ltd. Full waiver granted.

  • STO 2008 CESTAT 4
  • Stay: Commercial or Industrial Construction Service: The service provided in respect of roads, airports, and railways is not covered under  the commercial or industrial construction service. Partly stay granted.

  • STO 2007 CESTAT 1407
  • Stay: Commercial or Industrial Construction: The appellant received the payment during the period September, 2004 to June, 2005. Thereafter, it came to the notice the levy of service tax on commercial construction. They obtained registration under the said Act on 3rd August, 2005. The Superintendent of Service tax by letter dated 12-8-2005 directed the appellant to pay the tax and to file the returns. The appellant deposited the tax on 28th of August, 2005. Held penalty under section 78 of the Finance Act, 1994 cannot be imposed. Interest payable.

  • STO 2007 CESTAT 1402
  • Appellant carrying activities more akin to civil work in terms of the definition of the term “Commercial or Industrial Construction Services” were brought under the definition of “Interior Decorators”. The facts for both services almost identical, therefore, stay partly granted. (para 4)

  • STO 2007 Mad 327
  • Service Tax: Commercial or Industrial Construction Service: As per the explanation now added in Sr. No. 7 of the Notification No. 1/2006-S.T., dated 1-3-2006 the respondents are insisting that the value of the goods supplied and provided by the client of the Assessee would also be included. On a reading of the explanation, this court is prima facie of the view that such an insistence is not in accordance with the explanation. To that extent there will be an interim order as prayed for Notice. (para 2)

  • STO 2006 CESTAT 410
  • Service Tax: Consulting Engineer Services: Waiver of pre-deposit: The demand is not sustainable in the absence of any proposal in the notice for recovery of duty from the applicant as the notice adjudicated against the applicant in the impugned order only calls upon the assessee to show cause as to why duty should not be demanded and recovered from the assessee and there is no proposal for recovery of duty from the applicant company.(Para 1).

    Stay application allowed.
     

  • STO 2006 CESTAT 726
  • Consulting Engineer: it is settled law that transfer of technical know-how is not to be treated as 'Consulting Engineer's Service' for the purpose of levy of Service Tax under the Finance Act, 1994.

  • STO 2006 CESTAT 466
  • Service Tax: Construction of commercial and industrial buildings: Scope and liability: This was a new expanded category leviable to service tax from 16th June, 2005 and some of the construction was prior to 16th June, 2005 and, therefore, part of the demand cannot be sustained. Some contractors and sub-contractors have already discharged service tax liability and, therefore, the appellants cannot be called upon to pay service tax once again. The credit of Service tax already paid for the same activity should be allowed. These two submissions were not raised before the adjudicating authority.(Para 2)

    Appeal allowed by way of remand.
     

  • STO 2006 CESTAT 24
  • Service Tax: Consulting Engineer: Waiver of pre-deposit: The applicants are providing services of technical know-how and are therefore to be treated as Consulting Engineer liable to Service Tax and denying the benefit of exemption in terms of Notification No. 6/99. Service Tax dt. 9-4-99, which provides for exemption to taxable services provided in respect of which payment is received in India in convertible foreign exchange provided that nothing in the notification applies when the payment received in India in convertible foreign exchange for taxable services rendered is repatriated from or sent outside India. The authorities below have not accepted the contention of the applicants that the Bank in Israel, which is the country where the service was rendered deducted US $ 2000/- at source and the applicant was paid only US $ 18000/- in convertible foreign exchange and there was no repatriation. Therefore, prima facie appellant are entitled to the exemption under the notification. (Para 2).

    Application for waiver of pre-deposit allowed.

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