2015 (7) TMI 32 - AT - Service Tax

Commercial or Industrial Constructions Services - construction of educational institutes - Held that - First appellate authority as well as the adjudicating authority have clearly recorded that construction activity undertaken by the appellant/assessee was in respect of various activity undertaken by the appellant/assessee was in respect of various educational institutes. The definition of commercial and industrial construction services specifically excludes from service tax, the construction activity, which are no commercial or industrial in nature. We find that an identical issue, this bench had taken a view in the case of Anand Construction vs.CCE - 2013 (3) TMI 250 - CESTAT MUMBAI took a view has that construction of hostel or the residence of students studying in medical institute does not get covered under the category of commercial - or industrial construction service. - construction activity undertaken by the appellant/assessee in this case is for educational institution; following the ratio laid down by the Tribunal s decision, we hold that revenue s appeal is devoid of merits and is rejected. - Decided in favour of Assessee.

Summary

Issues Involved:
1. Taxability of construction services for educational institutes.
2. Taxability of construction services for sugar factories.
3. Liability for service tax, interest, and penalties.

Issue 1: Taxability of construction services for educational institutes
The appellant provided construction services for schools and colleges, and the issue was whether these services were subject to service tax. The first appellate authority held that construction for educational institutes is not taxable, while construction for factories is taxable. The appellant argued that they had a genuine belief that the construction for sugar factories was not taxable. The department contended that educational institutions are commercial concerns based on the appellant's profits. The Tribunal referred to previous decisions and held that construction for educational institutions does not fall under commercial or industrial construction services, thus rejecting the revenue's appeal.

Issue 2: Taxability of construction services for sugar factories
The impugned order confirmed the demand for service tax, interest, and penalties on the construction activities for sugar factories. The Tribunal found that construction for sugar factories falls under commercial or industrial construction services, upholding the demand for service tax and interest. However, considering that the appellant had already paid the service tax and interest, and had a genuine belief that the activity was not taxable, the Tribunal invoked Section 80 to set aside the penalties imposed on the appellant.

Issue 3: Liability for service tax, interest, and penalties
The Tribunal disposed of both appeals, rejecting the revenue's appeal regarding construction for educational institutes and upholding the demand for service tax and interest on construction for sugar factories. However, the Tribunal set aside the penalties imposed on the appellant under Section 80 due to the appellant's genuine belief and payment of service tax and interest.

This judgment clarifies the taxability of construction services for different types of entities and emphasizes the importance of genuine belief and compliance with service tax obligations to avoid penalties.