2016 (7) TMI 49 - AT - Service Tax

Waiver of pre-deposit - Commercial or industrial construction service - Construction of sports stadium for Commonwealth Games - construction of watch tower and raising height of security wall around Siri Fort Sports Complex for security purpose in connection with Commonwealth Games and after the Commonwealth Games, these were pulled down as they were no longer required - Held that - appellant has made out a case for complete waiver of pre-deposit and we order accordingly staying recovery of the impugned liability during pendency of the appeal - Stay granted.

Summary

Issues:
1. Service tax demand confirmation for construction services provided.
2. Classification of construction services as commercial or non-commercial.
3. Justification of service tax demand based on the purpose of construction.

Analysis:
1. The appeal was filed against the Order-in-Appeal confirming a service tax demand of ?27,90,756 for the period March to October 2010. The appellant provided construction services but did not pay service tax, leading to the demand being upheld along with interest and penalty.

2. The appellant argued that the construction undertaken, such as building a watchtower and raising the security wall around a sports complex for the Commonwealth Games, was not commercial or industrial in nature. Referring to previous judgments, the appellant contended that constructions for public purposes, like sports stadiums, should not be classified as commercial constructions merely because fees are charged for usage. The Tribunal's past decisions supported the appellant's stance that such constructions are non-commercial in nature.

3. On the contrary, the Revenue representative asserted that the construction was indeed commercial as fees were charged for using the facilities. The Revenue argued that even if the structures were later dismantled, the initial construction purpose remained commercial. However, the Tribunal referred to previous cases where similar demands related to constructions for public events were stayed, indicating a trend of considering such constructions as non-commercial. The Tribunal found merit in the appellant's argument and granted a stay on the recovery of the tax liability during the appeal process.

This judgment highlights the importance of determining the nature of construction services provided and whether they qualify as commercial or non-commercial based on the purpose and usage of the structures. The Tribunal's analysis of previous decisions provides a framework for understanding when constructions for public purposes may not be classified as commercial, even if fees are charged for utilization.