2015 (10) TMI 229 - AT - Service Tax

Demand of service tax - Commercial or industrial construction service - Held that - Clause (d) of the definition provides that the repair undertaken in respect of buildings in clause (b) and (c) would be leviable to Service Tax and clause (c) speaks of only new buildings. Moreover, it was also submitted that they replaced only doors and the door cost has also been included. It is an arguable issue and the show cause notice was issued on 20-4-2011 and therefore, substantial portion of the demand would be beyond the normal period of limitation and therefore, at this stage, we consider that we need not insist for pre-deposit in respect of this service - appellant has not made out a prima facie case in respect of Service Tax demand of about ₹ 25 lakhs. Taking note of the fact that the appellant has deposited an amount of ₹ 10 lakhs as per the directions of the learned Commissioner (Appeals) for hearing the appeal, we consider that appellant should be directed to deposit another ₹ 10 lakhs within six weeks - Decided against assessee.

Issues: Service Tax liability on construction services provided to customers, classification of services under commercial or industrial construction service, works contract service, liability for repair and replacement works, limitation period for demand, pre-deposit requirement.

Analysis:

1. Service Tax Liability on Construction Services:
The appellant provided services to various customers during 2007-08 to 2010-11 without paying Service Tax. The services were classified under commercial or industrial construction service and works contract service, leading to a demand of &8377; 32,50,113/-, upheld by the learned Commissioner (Appeals) in the impugned order.

2. Classification of Services - Industrial or Commercial Construction:
The appellant argued that the construction activities undertaken for entities like SCCL were not for industrial or commercial purposes, hence should not attract Service Tax. However, the Tribunal opined that the construction of cycle stands, canteen buildings, project offices, etc., for SCCL should be considered as constructed for industrial purposes, making them liable for Service Tax.

3. Liability for Repair and Replacement Works:
Regarding the replacement of doors and windows, the Tribunal examined the works contract service definition, emphasizing that repair works for new buildings attract Service Tax. The appellant's argument that they only refixed doors and the cost was included raised an arguable issue. The Tribunal noted that a substantial portion of the demand was beyond the normal limitation period, hence not insisting on pre-deposit at that stage.

4. Limitation Period for Demand:
The Tribunal considered the limitation period for the demand, acknowledging that a show cause notice was issued on 20-4-2011. They highlighted that a substantial portion of the demand would be beyond the normal limitation period, impacting the requirement for pre-deposit at that stage.

5. Pre-deposit Requirement:
Despite the appellant's deposit of &8377; 10 lakhs as per the directions of the learned Commissioner (Appeals), the Tribunal directed the appellant to deposit another &8377; 10 lakhs within six weeks to comply with the order. Non-compliance within the specified date would lead to the rejection of the appeal, emphasizing the importance of meeting the pre-deposit requirement for further proceedings.

This detailed analysis of the judgment by the Appellate Tribunal CESTAT BANGALORE highlights the various issues involved, including Service Tax liability, classification of services, repair and replacement works, limitation period considerations, and pre-deposit requirements, providing a comprehensive understanding of the legal implications and decisions made in the case.

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