2010 (11) TMI 594 - AT - Service Tax

Stay - Demand - Time barred - Suppression of facts - commercial or industrial construction service - it is doubtful as to whether the air catering unit constructed by the appellants can be called a passenger facility as the same is not used by the passengers while they are at the airport but the unit is used for catering food and beverages to the aircraft for use by the passengers on board - There is no dispute that part of the airport has been leased to M/s. Taj Sats Air Catering Ltd. who in turn have engaged the appellants to build the air catering unit at the Bangalore International Airport - prima facie view that the area in which the air catering unit has been constructed is a part of the aerodrome/airport and hence the service relating to construction of the air catering unit on such area would get excluded from the definition of commercial or industrial construction service - Stay granted.

Summary

Issues Involved:
Whether appellants are liable to pay service tax for air catering unit construction at Bangalore International Airport.

Detailed Analysis:

Issue 1: Nature of Service Rendered
The appellants argued that the service rendered was in the nature of a works contract not subject to service tax before 1-6-2007. They also contended that the service was a passenger facility excluded from 'Commercial or Industrial Construction Service.' Additionally, they claimed the service was related to an aerodrome, further excluding it from the scope of commercial construction service. They also argued that the demand was partly time-barred due to no suppression of facts.

Analysis: The adjudicating Commissioner held that the appellants are liable to pay service tax under 'commercial or industrial construction service.' The Commissioner also applied a longer period of limitation and confirmed a service tax demand of Rs. 99,55,124/- along with interest and a penalty of equal amount.

Issue 2: Exclusion from 'Commercial or Industrial Construction Service'
The appellants sought exclusion from 'commercial or industrial construction service' based on the nature of the service provided. Section 65(25b) of the Finance Act, 1994 defines this service, excluding services related to airports.

Analysis: The definition of 'airport' includes an aerodrome, which encompasses all buildings and structures. The area where the air catering unit was constructed is part of the aerodrome/airport, leased to M/s. Taj Sats. The Tribunal held that the area is part of the aerodrome/airport, excluding the service from 'commercial or industrial construction service.' Thus, predeposit requirement was waived during the appeal.

Conclusion:
The Tribunal ruled in favor of the appellants, excluding the service related to the air catering unit construction from 'commercial or industrial construction service' based on the definition of 'airport' and 'aerodrome.' The requirement of predeposit was waived, and recovery stayed during the appeal process.