2015 (12) TMI 332 - AT - Service Tax

Waiver of pre deposit - Demand for Service Tax with interest, penalties - construction of shopping complex for Municipalities - Held that - we cannot say that the purpose is not commercial at all even though it is meant for Municipality. Learned Counsel vehemently argued that the Municipality may not rent out for shopping but may rent out for the Government organization also and in any case, the Municipality is not a commercial organization. We are not convinced with all these arguments. The question is not whether the service provider is a commercial organization or not; the question is whether the objective of the service is commercial or industrial. When a shopping complex is constructed with an intention to rent out the shops, the objective is for income and therefore, it is for commercial purpose. Therefore, we find that the appellant has not made out a prima facie case in this regard also. - Partials stay granted.

Summary

Issues: Demand for Service Tax, Cum-tax treatment, Industrial or Commercial Construction Services, Construction of reservoir and laying pipelines, Construction of shopping complex for Municipalities, Prima facie case, Pre-deposit amount.

Analysis:
1. Demand for Service Tax: The judgment involves a confirmed demand for Service Tax amounting to Rs. 94,18,889/- with interest for the period from 1-4-2005 to 30-9-2010. Penalties under various Sections have also been imposed along with the demand.

2. Cum-tax treatment: The appellant argued that the benefit of cum-tax treatment of the amount received has not been extended. An amount of Rs. 42,56,973/- has been demanded under the Head "Industrial or Commercial Construction Services" for providing construction services related to water supply facilities to an Industrial Growth Centre. The appellant relied on a previous Tribunal decision to support their case.

3. Construction of reservoir and laying pipelines: It was mentioned that the construction of reservoir and laying pipelines was carried out for drinking water supply, indicating a different aspect of the services provided by the appellant.

4. Construction of shopping complex for Municipalities: Another substantial amount of demand was related to the construction of a shopping complex for Municipalities. The argument presented was that even though the Municipality may not rent out for commercial purposes, the objective of constructing the shopping complex was for commercial purposes, as it was intended to generate income through renting out the shops.

5. Prima facie case and Pre-deposit amount: The Tribunal analyzed the arguments presented by the appellant and directed them to pre-deposit a sum of Rs. 45 lakhs, taking into account the amount already paid, within a specified timeframe. Failure to comply would result in the dissolution of the stay granted, allowing the Revenue to realize the entire liability.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal, the arguments presented by the appellant, and the decision rendered regarding the demand for Service Tax and related penalties.