2017 (12) TMI 552 - AT - Service Tax

Liability of service tax - activity of the appellant of production and supply of RMC - Held that - the appellants are engaged in production and supply of RMC. Necessarily such production and supply at site requires the equipments relevant to the same. Considering the nature of RMC, the same are to be supplied and used immediately. Use of equipments for due delivery of RMC in the required site in a manner as required by the client, will not make the supplier of RMC as a person engaged in commercial construction of building - in GMK Concrete Mixing Pvt. Ltd. 2011 (11) TMI 425 - CESTAT, NEW DELHI , it was held that supply of RMC and carrying out auxiliary and incidental activities of boring, pumping and laying of concrete cannot be considered for tax liability under construction service - demand set aside. Construction of Hostel for Medical College - whether taxable under commercial or industrial construction service or not? - Held that - certain amount is held to be liable to Service Tax by the original authority, in view of the submission made by the appellant to indicate that they have received the amount in two different financial years. Though the ld. Counsel for the appellant submitted that this is only a typographical error in their written submission, we find that the facts requires verification with basic documents - matter on remand. Demand of service tax - construction of apartments for Army - Held that - the construction of apartments is for the personal use of the staff of Army. The impugned order did not classify the service under construction of complex service. Proposal in the notice was to tax all consideration under commercial or industrial construction service. Admittedly, the appellants have produced documentary evidence in this regard before us only. The same can be scrutinized by the original authority for exclusion from the tax liability - matter on remand. Demand of service tax - landscaping horticultural work - Held that - The appellants are managing and maintaining gardens and undertaking various activities. The activities are covered by Clause (a) and (b) of Section 65 (64) of the Finance Act, 1994, which talks about management of properties immovable or not and maintenance or repair of properties immovable or not - the appellants shall be liable to tax for their activities of managing and maintaining gardens and horticultural activities with reference to such gardens - demand upheld. Construction of parking at Narender Cinema and Nehru Garden for Municipal Corporation, Jalandhar - demand of service tax - Held that - the parking lots are used for commercial purpose and it cannot be considered as a non-commercial activity - demand upheld. Extended period of limitation - Held that - considering the nature of services and also the issues of interpretation involved including supply of RMC mix, maintenance of gardens, work executed for Jalandar Municipality and Karnataka Government, there can be no case for invoking extended period in such situation - extended period rightly invoked. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Service Tax liability on production and supply of readymix concrete (RMC).
2. Service Tax liability on construction of Hostel for Medical College and apartment complex for Army personnel.
3. Tax liability for landscaping horticultural works and construction of parking facilities.
4. Validity of penalties imposed and invocation of extended period for demand.

Analysis:
1. The first issue pertains to the Service Tax liability on the production and supply of RMC by the appellants. The impugned order considered the activities as related to the construction of commercial buildings due to the use of construction equipment. However, the Tribunal held that the supply of RMC and related activities cannot be taxed under construction service, citing previous decisions. Thus, the tax liability on RMC production and supply was deemed unsustainable.

2. Regarding the construction of a Hostel for a Medical College and apartments for Army personnel, the Tribunal found that these activities do not fall under commercial or industrial construction services. The appellants provided evidence supporting their claim, which necessitated verification by the original authority. The Tribunal referred to past decisions and held that the construction for personal use by Army staff does not attract Service Tax. The tax liability on these constructions was deemed unsustainable.

3. The issue of tax liability for landscaping horticultural works and construction of parking facilities was also addressed. The Tribunal noted that post-amendment, any service related to movable or immovable property is taxable. The appellants' argument that managing gardens does not constitute maintenance or repair service was rejected. The activities fell under the tax entry covering property management and maintenance, making the appellants liable for Service Tax in this regard.

4. Finally, the Tribunal discussed the penalties imposed and the invocation of the extended period for demand. It was observed that the impugned order did not provide reasons for invoking the extended period. Considering the nature of services and interpretation issues, the Tribunal concluded that the demand should be limited to the normal period only. Penalties imposed on the appellants were set aside based on the lack of justification for invoking the extended period. The judgment specified the activities for which Service Tax liability was upheld and directed the original authority to re-examine and quantify the tax liability accordingly.