2013 (11) TMI 870 - AT - Service Tax

Classification of service - Commercial or Non commercial service - Whether the Sports Complex Stadium constructed for the purpose of holding games can be considered as a commercial or industrial construction - Held that - Sports Stadia is used for public purpose. Merely because some amount is charged for using the facility, it cannot become a commercial or industrial construction. Even in a Children s Park, entry fee may be levied for maintenance of the Park. Merely because some amount is charged for using the Park, it cannot be said that it is a commercial or industrial construction. Adopting the same logic, the Sports Stadia in the present case is also a non-commercial construction for use by the public. Therefore, we are of the considered view that the Sports Stadium constructed for conducting Commonwealth Games, is a non-commercial construction - Following decision of B.B. Nirman Sahakari Samiti Vs. State of Rajasthan 1979 (11) TMI 256 - RAJASTHAN HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Whether the construction undertaken by the appellant constitutes 'Commercial or Industrial Construction' as per Section 65(25b) of the Finance Act, 1994.

Analysis:
The appeal was directed against an Order-in-Original passed by the Commissioner of Central Excise, Pune-III. The appellant constructed a Sports Stadium Complex for the Government of Maharashtra, known as Shiv Chhatrapati Sports Complex. The main issue was whether this construction fell under 'Commercial or Industrial Construction Service' as defined in the Finance Act, 1994. The adjudicating authority confirmed a demand of Rs. 10,21,11,459/- and imposed a penalty under the Finance Act, 1994. The appellant contested this decision, arguing that the construction was not for commercial purposes but for public welfare.

The appellant presented evidence to support their claim, including certificates from local authorities and the Directorate of Sports & Youth Services. They also referred to circulars issued by the Board clarifying the taxability of constructions used for non-commercial purposes. The appellant emphasized that the stadium was built for the Commonwealth Youth Games and funded by the government, intended for non-commercial use even after the event. They argued that the construction did not meet the criteria for 'Commercial or Industrial Construction Service' under the Finance Act, 1994.

The Commissioner (AR) supported the adjudication order, pointing to the rates set for commercial usage of the stadium and a Government Resolution allowing commercial purposes on a portion of the area. However, the appellant countered by explaining the rate-list was for organizing sports competitions, not solely commercial activities. They highlighted that local authorities did not classify the construction as residential or commercial, indicating a non-commercial nature. The Tribunal deliberated on the public utility aspect, emphasizing that charging for usage does not automatically make a facility commercial or industrial.

In the final analysis, the Tribunal concluded that the Sports Stadium Complex was a non-commercial construction, not subject to service tax under 'Commercial or Industrial Construction Service'. They referenced legal definitions of public utility and public facility to support their decision. Consequently, the appeal was allowed, overturning the duty demand and penalty imposed on the appellant.