2018 (2) TMI 1041 - AT - Service Tax

Commercial or Industrial Construction Services - construction of cardio vascular centre at Bikaner by M/s. N.S. Associates for M/s. Haldiram Charitable Society - whether commercial activity or otherwise? - Held that - The provisions of Section 65(25)(b) intended for taxing Commercial or Industrial Construction Service is for construction of a new building or civil structure, which is used or to be used primarily for commerce or industry or work intended for commerce or industry. The building now in dispute is a medical facility intended to be used for treatment of public. In fact, the respondent pleaded that the said building has been handed over to the Government for use as a medical facility for common public. The hospitals and buildings for medical facilities used by the public cannot be considered as civil construction or building intended for use for commerce or industry. Collection of fee, if any, for the usage of the said facility by itself will not make a building as used for commerce or industry. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Rectification of mistake in the final order dismissing the appeal by the Revenue.
2. Dispute over the exemption granted for the construction of a Cardio Vascular Centre.
3. Interpretation of "Commercial or Industrial Construction Services" under the Finance Act, 1994.
4. Determination of the usage of the building for taxation purposes.

Analysis:
The Revenue filed a misc. application seeking rectification of a mistake apparent in the Final Order, which dismissed their appeal due to the disputed amount being below the ceiling fixed for filing the appeal as per the Ministry of Finance's litigation policy. The dispute centered around the exemption granted for the construction of a Cardio Vascular Centre, with the amount involved in service tax being in question.

Upon hearing both parties and reviewing the appeal records, it was agreed to reconsider the matter for a final decision on merit. The Revenue contended that the Centre's construction was wrongly deemed non-taxable due to the charitable nature of the society it served, arguing that the Income Tax Act's provisions should not dictate the interpretation of "commercial" under the Finance Act, 1994. They claimed the exemption was not applicable to the building's construction.

In response, the respondent's consultant clarified that the Centre was built as a medical facility under an agreement with the Charitable Society, which later handed it over for government use. The Tribunal noted that the building was indeed a medical facility for public treatment, emphasizing that the tax entry pertained to the building's usage. It was highlighted that structures like hospitals serving the public did not fall under the category of civil construction for commerce or industry, regardless of any fees collected for usage.

After thorough analysis, the Tribunal concluded that the impugned order was justified, as the Centre's intended use for public medical treatment did not align with the definition of "Commercial or Industrial Construction Services." Therefore, the appeal by the Revenue was dismissed, affirming the decision in the original order.

This detailed judgment addresses the rectification application, exemption dispute, statutory interpretation, and building usage determination, providing a comprehensive analysis of the legal issues involved in the case.