2013 (10) TMI 962 - AT - Service Tax

Stay application - appellant constructed Police Station, Electrification work, Strengthening of Police Quarters and various other Construction Services - Held that - appellant as a sub-contractor of Gujarat State Police Housing Corporation Pvt. Limited constructed dwellings and is not eligible for the benefit of reduced service tax liability. Findings of the adjudicating authority that appellant being contractor, and the dwellings which are constructed for Gujarat State Police Housing Corporation Pvt. Limited, are not residing in the said residences. The adjudicating authority has confirmed the demand on the ground that the said dwellings are given by the Gujarat State Police Housing Corporation Pvt. Limited to police personnel and the personnel of jail department, hence the service tax liability arises. We find that in an identical issue, the coordinate Bench of the Tribunal in the case of S. Kadirvel vs. Commissioner Central Excise & S.T., Tiruchirapalli 2013 (8) TMI 262 - CESTAT CHENNAI , has held that if the project is executed for the State Police Housing Corporation Limited, the said quarters are allotted by the State Government, service tax liability, prima-facie, does not arise - Stay granted.

Summary

Issues: Service tax liability on construction services rendered by the appellant as a sub-contractor to Gujarat State Police Housing Corporation Pvt. Limited.

Analysis:
The judgment pertains to a stay petition where the appellant's advocate sought an adjournment due to unpreparedness, which was declined by the tribunal. The issue revolves around the service tax liability imposed on the appellant for constructing dwellings as a sub-contractor for Gujarat State Police Housing Corporation Pvt. Limited. The departmental representative argued that the appellant's activities are chargeable for service tax as the services were not rendered to individuals occupying the dwellings. The adjudicating authority confirmed the demand, stating that the dwellings were provided to police personnel and jail department employees, triggering the service tax liability.

Upon reviewing the records, the tribunal noted that the appellant, as a contractor, constructed dwellings for Gujarat State Police Housing Corporation Pvt. Limited, where the residents were not the ones residing in the constructed quarters. Citing a precedent from a coordinate Bench of the Tribunal, it was highlighted that if the project is executed for the State Police Housing Corporation Limited and the quarters are allotted by the State Government, the service tax liability may not arise. Consequently, the tribunal found that the issue seems to be in favor of the appellant at the stay stage.

As a result, the tribunal allowed the application for the waiver of pre-deposit of the amounts involved and stayed the recovery until the appeal is disposed of. The judgment was dictated and pronounced in court, providing relief to the appellant regarding the service tax liability on the construction services rendered.