2018 (4) TMI 772 - AT - Service Tax

Commercial and Industrial Construction Service - construction of roads - public roads or not - road constructed by those organizations are used for their Commercial purpose only - case of Revenue is that the roads constructed by the appellant should not be considered as Public roads, in order to fall within the exclusion clause provided under the Definition of Commercial and Industrial Construction Service - Held that - irrespective of the purpose of construction of the road, whether for public utility or for the utility of organization concerned for their use, the benefit of exclusion clause provided in the definition under 65(25)(b) of the Act should be available, for non-levy of Service Tax. Since there is no ambiguity in plain reading of the definition and in view of the admitted fact that the appellant had constructed roads for different commercial entities/organization, the benefit of the exclusion provided in the definition clause should be available to it - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of exclusion clause under the definition of Commercial and Industrial Construction Service for roads.

Analysis:
The appeal was against an order passed by the Commissioner Central Excise and Customs, Jaipur, regarding the construction of roads by the appellant for various organizations. The Department contended that since the roads were used for commercial purposes by these organizations, they should not be considered public roads, leading to a demand for Service Tax under the taxable category of service.

The appellant argued that the definition of Commercial or Industrial Construction Service excludes the construction of roads from the scope of Service Tax payment. Since the definition does not differentiate between public and private roads, the roads constructed by the appellant for different organizations should be eligible for the exclusion, and no Service Tax demand should be confirmed under this taxable category.

After hearing both sides and examining the records, the Tribunal referred to the definition of "Commercial or Industrial Construction" under Section 65(25)(b) of the Finance Act, 1994, which explicitly excludes services provided in respect of roads from the taxable service. The definition does not specify the type of roads, whether public or private, for the exclusion clause. Therefore, regardless of the purpose of road construction, whether for public utility or organizational use, the exclusion clause should apply for non-levy of Service Tax. As there was no ambiguity in the definition and considering that the roads were constructed for commercial entities, the Tribunal concluded that the appellant should benefit from the exclusion clause.

Consequently, the impugned order confirming the Service Tax demand against the appellant was set aside, and the appeal was allowed in favor of the appellant.