2012 (3) TMI 337 - AT - Service Tax

Construction Service civil construction for BSNL, MHADA and MTDC - period involved September 2004 to March, 2008 assessee contending no liability to pay service tax since services are not rendered to commerce or industry - Held that - With regard to the construction of civil structure on behalf of MHADA - it is a construction of buildings under re-development scheme of the State Government for the welfare of the poor people for their rehabilitation - service does not come under construction service as defined under the Finance Act, 1994. MTDC - said structure has been constructed for development of that area for tourism purposes and tourism itself is an industry - said civil construction comes under the category of Construction Service . With regard to the structure constructed for BSNL leveling platforms for installation of tower is also under the nature of civil construction and BSNL is also engaged in telecommunication industry - covered under the category of Construction Service However, since activity of construction service came under the service tax net w.e.f 10.09.2004, therfore, no service tax is payable on the service rendered prior to 10.09.2004 Decided partly in favor of asseseee

Summary

Issues:
- Waiver of pre-deposit of demand of service tax
- Nature of services rendered by the applicant
- Classification of services under the category of 'Construction Service'
- Liability to pay service tax on services rendered
- Financial hardship faced by the applicant

Analysis:

The judgment revolves around the applicant seeking a waiver of pre-deposit of demand of service tax amounting to Rs.6,62,503/- confirmed against them, along with interest and penalty. The applicant, engaged in civil construction activities for various entities, contested that the services provided did not fall under the definition of 'construction service' as per section 65(30a) of the Finance Act, 1994, hence not liable for service tax. The applicant argued that services rendered for MHADA under a redevelopment scheme funded by the Central and State Government for the welfare of poor people did not constitute services to commerce or industry. However, the construction of civil structures for MTDC in remote areas for tourism development was considered falling under the ambit of 'Construction Service' as tourism is deemed an industry. Similarly, the construction for BSNL, even though not involving building structures but leveling platforms for towers, was categorized as 'Construction Service' due to BSNL's engagement in the telecommunication industry. The tribunal agreed that no service tax was payable for services rendered before 10.09.2004, reducing the demand for services provided to BSNL and MTDC to Rs. 1,90,000. The applicant's financial hardship was acknowledged, and a pre-deposit of Rs.1,00,000 was directed, with the remaining amount, interest, and penalties waived during the appeal's pendency.

The tribunal found that the construction service provided to MHADA under a redevelopment scheme funded by the Central and State Government for the welfare of poor people did not align with the definition of 'construction service' under the Finance Act, 1994. However, the civil construction undertaken for MTDC in remote areas for tourism development was considered falling under the category of 'Construction Service' as tourism is recognized as an industry. The construction activities for BSNL, even though involving platform leveling for towers, were also deemed to fall under 'Construction Service' due to BSNL's association with the telecommunication industry. The tribunal acknowledged the applicant's financial constraints, directing a reduced pre-deposit of Rs.1,00,000 and waiving the remaining amount, interest, and penalties during the appeal process.

In conclusion, the judgment addresses the waiver of pre-deposit of service tax demand, the nature of services provided by the applicant, the classification of services under 'Construction Service,' the liability to pay service tax, and the applicant's financial hardship. The tribunal differentiated between services provided for MHADA, MTDC, and BSNL, ultimately directing a reduced pre-deposit amount considering the applicant's financial situation and waiving the remaining dues during the appeal's pendency.