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2018 (7) TMI 620 - AT - Service TaxClassification of services - Dredging Services - Penalty - Held that - In respect of dredging services It then appears to reason that not only are the two essentialities of the definition of dredging under Section 65 (36a) of the Act namely, removal of material and such removal related to or while excavating, cleaning etc., required to be present in tandem, but also, such activity will require the use of a boat, ship etc. equipped with a dredger, or, at the very least, there has to be use of dredging apparatus for enabling the activity - While assessee has certainly performed the works of deepening, widening and construction of flood protection walls etc. using cement and steel, there are no attendant contracts to dredge From the facts and records there is also no narration that boats or ships equipped with dredgers or for that matter, any dredging apparatus or equipment was used by the assessees for clearing or deepening these water bodies - decided in favor of the assessee. Construction of residential complex - Held that - The periods of demand in all these disputes related to construction of residential complexes for KHB etc. spans from 2005 to 2015. There are merit in the appellant s contention that demands on this score prior to 1.6.2007 is liable to be set aside in view of the decision of the Hon ble Apex Court in CCE & CC Kerala Vs Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT - demand set aside. Demands for the periods subsequent to 1.6.2007 - Held that - In a number of decisions, the higher appellate forums have consistently held that there is no liability to pay service tax for the reason that the complex so constructed are intended for personal use which is excluded in the definition of construction of residential complex - Even after the negative list regime w.e.f. 1.7.2012, higher appellate forums have consistently held that services provided by contractors to Housing Boards, Local Development Authority under JNNRUM etc. there could be no service tax liability since such houses etc. were meant for residential purpose, was within exemption under Notification No.25/2012- ST. Tax liability - CICS, MMR services etc. alleged to have been provided by the appellant - Held that - The appellants had undertaken the construction as a composite contract and received payment from June 2005 to October 2005. This being so, in view of the settled law as laid down by the Hon ble Apex Court in the case of L&T Ltd. 2015 (8) TMI 749 - SUPREME COURT . These services will have to be treated as works construction service which cannot be exigible to service tax levy prior to 1.6.2007 - demand set aside. Appeal allowed in toto - decided in favor of the assessee.
Issues Involved:
1. Classification of services provided by the assessee as dredging services. 2. Service tax liability on construction of residential complexes for government bodies. 3. Classification and taxability of services under Commercial or Industrial Construction Service (CICS) and Management, Maintenance, or Repair Services (MMR). 4. Taxability of services provided under Erection, Commissioning, or Installation Service (ECIS). 5. Imposition of penalties under various sections of the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Classification of Services as Dredging Services: The activities in question involved widening, deepening, and constructing flood protection walls in various drainage channels and canals. The adjudicating authority had classified these activities as dredging services under Section 65 (36a) of the Finance Act, 1994. However, the tribunal found that the work did not involve removal of material from rivers, ports, harbours, backwaters, or estuaries using dredging equipment. The tribunal concluded that the activities did not fall within the definition of dredging services and set aside the demands related to these projects. 2. Service Tax Liability on Construction of Residential Complexes for Government Bodies: The tribunal examined the tax liability for construction activities undertaken for Karnataka Housing Board (KHB), Tamil Nadu Slum Clearance Board (TNSCB), and other similar bodies. It was found that the demands for periods prior to 1.6.2007 were not sustainable in light of the Supreme Court decision in Larsen & Toubro Ltd. The tribunal also noted that the construction of residential complexes for personal use by government bodies was not taxable. The tribunal set aside the demands for these periods and projects, including those under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). 3. Classification and Taxability under CICS and MMR Services: - Municipality Shopping Complex, Pudukottai: The tribunal found that the construction was for commercial purposes and upheld the demand. However, since the contract was composite, it was classified as works contract service and not taxable prior to 1.6.2007. - Sri Ram Avenue, Coimbatore: The tribunal classified the work as a composite contract and set aside the demand as it was not taxable prior to 1.6.2007. - Royal Orchid Hotel, Bangalore: The tribunal upheld the demands as the construction was for commercial purposes and not performed on behalf of the municipality. - Power Grid Corporation Ltd.: The tribunal set aside the demand, stating that the service was in the public interest and not taxable. 4. Taxability under ECIS: - CMBT Fire Fighting System: The tribunal found that the work was for commercial purposes and upheld the demand under ECIS. - Other Projects (NIE, CISF, Commissioner of Police): The tribunal set aside the demands, noting that the services were provided to government bodies and were not taxable. 5. Imposition of Penalties: The tribunal noted the confusion regarding the taxability of the services and set aside all penalties imposed in the impugned orders. The department's appeal for the imposition of penalties under Section 78 was dismissed. Conclusion: - The tribunal allowed the appeals related to dredging services, construction of residential complexes for government bodies, and certain projects under CICS and ECIS. - Demands related to Royal Orchid Hotel and CMBT Fire Fighting System were upheld. - All penalties were set aside, and the department's appeal was dismissed.
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