2018 (4) TMI 960 - AT - Service Tax

Industrial or Commercial Construction Service - construction of the guest house for M/s. Aditya Cement - Held that - It is not used for commercial occupation of any guests other than the employees of M/s.Aditya Cement. Such building is neither used for commercial purpose nor for industrial purpose - appeal allowed.

Summary

Issues: Service tax liability for construction of a guest house for a company under "Industrial or Commercial Construction Service."

Analysis:

1. Issue: Service Tax Liability

The main point of contention in the appeal was the service tax liability of the appellant concerning the construction of a guest house for a specific company. The impugned order initially held the appellant liable for service tax under the category of "Industrial or Commercial Construction Service."

2. Issue: Arguments of the Appellant

The appellant's counsel argued that the guest house in question was constructed for the company's employees' personal use during their visits and was not intended for commercial purposes. They presented a certificate from the company confirming that the guest house was solely for the use of group employees and company guests, emphasizing that it did not serve any commercial or industrial purpose.

3. Issue: Arguments of the Respondent

In contrast, the respondent, relying on the impugned order, contended that the guest house formed part of the company's business building and, therefore, should be subject to taxation.

4. Issue: Tribunal's Decision

Upon reviewing the arguments from both sides and examining the appeal records, the Tribunal noted that the Original Authority had initially ruled in favor of the appellant, stating that the guest house did not qualify as a building used for commerce or industry. However, the impugned order reversed this decision based on a previous Tribunal case involving input service credit for a guest house.

5. Issue: Tribunal's Rationale

The Tribunal highlighted that the previous case cited in the impugned order did not directly apply to determining the nature of the building for tax purposes. The Tribunal emphasized that since the guest house was exclusively used by the company's employees and not for commercial or industrial purposes, it should not be subject to taxation. Therefore, the Tribunal set aside the impugned order and reinstated the Original Authority's decision, thereby allowing the appeal.

6. Conclusion

Ultimately, the Tribunal concluded that the guest house, being utilized solely by the employees of the company and not for commercial or industrial activities, should not be considered under the purview of taxable services. As a result, the impugned order was overturned, and the Original Authority's decision was upheld, leading to the allowance of the appeal.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, the Tribunal's decision-making process, and the final conclusion reached in the case.