2018 (8) TMI 103 - AT - Service Tax

Construction services - various activities done by the appellant - it is observed that the appellant, even prior to the registration were engaged in construction services, but have not discharged the liability for the period with effect from April 2005 to September 2009 - benefit of abatement denied - whether all such activities of the assessee/respondent can be categorized as Commercial or Industrial Construction Services? Held that - Perusal of definition of commercial or industrial construction services makes it clear that the services rendered by the appellant will fall under Sub-clause C thereof. Since the material is also provided by the service provider, the case of the appellant as far as completion and finishing services as detailed above are concerned, it stands clearly covered under Item No. 5 of the Table given in Notification No. 1/2006-ST dated 01.03.2006 - the Commissioner (Appeals) has rightly extended the benefit of this notification. The other construction services which are residential in nature, the phraseology itself takes that Contract out of the definition of Commercial and Industrial Construction. Hence, levying the demand for the said construction under the head of it being commercial is, therefore, not at all sustainable. Levy has rightly been done away. Commercial nature of services - Held that - dmittedly assessee/respondent is constructing Ambedkar Peeth, a programme under Government of Rajasthan for M/s AVS and is also rendering services to a PSU, i.e., Jaipur Vidyut Vitran Nigam Limited (JVVNL) both being the authorities under Government of Rajasthan in services rendered to them will clearly be out of the ambit of the above definition of Commercial and Industrial Construction. Resultantly, any demand raised for these constructions under Commercial or Industrial Construction Services is not sustainable - demand rightly set aside. Penalty u/s 76, 77 and 78 of FA - Suppression of facts - Held that - Since the assessee/respondent has not filed the Service Tax return in the form ST3 in the manner and frequency required under Service Tax Rules, 1994 and has also failed to pay the due Service Tax, the same amounts to the deliberate suppression of facts - Otherwise also, the law requires assessee itself to determine the classification of service and to pay tax on self assessment basis. Since the assessee/respondent has failed to act accordingly, the penalty under Section 76 and 78 have rightly been confirmed against the respondent - the penalty under Section 77 has been done away as being not warranted in view of the penalties imposed under Section 76 and 78. Appeal allowed in part.

Summary

Issues Involved:
1. Denial of abatement under Notification No. 01.2006 dated 01.03.2006.
2. Applicability of penalties under Section 76 and 78.
3. Classification of construction services as commercial or industrial.
4. Suppression of facts by the respondent.
5. Eligibility for benefit under Section 80 of the Finance Act.

Issue 1: Denial of Abatement under Notification No. 01.2006 dated 01.03.2006:
The appellant was registered under Service Tax for providing commercial or industrial construction services and was claiming abatement under the said Notification. The department denied the abatement benefit and levied a demand for the period from April 2005 to September 2009. The Commissioner (Appeals) modified the order, dropping the demand for certain services rendered for specific entities, allowing abatement under the Notification, and proportionately reducing the demand for other services. However, penalties under Section 76 and 78 were confirmed.

Issue 2: Applicability of Penalties under Section 76 and 78:
The department challenged the dropping of penalties under Section 77 and appealed to the Tribunal. The Tribunal upheld the penalties under Section 76 and 78, citing the failure of the respondent to file Service Tax returns as required and to pay the due tax, constituting deliberate suppression of facts. The penalties under Section 76 and 78 were deemed warranted, while the penalty under Section 77 was waived.

Issue 3: Classification of Construction Services as Commercial or Industrial:
The Tribunal analyzed the services provided by the respondent, determining whether they fell under the definition of Commercial or Industrial Construction Services. The definition includes various construction activities related to buildings or civil structures. The Tribunal found that certain services provided by the appellant were covered under completion and finishing services, allowing for abatement under the Notification. However, construction services of a residential nature were excluded from the definition of commercial or industrial construction, leading to the dropping of demand for such services.

Issue 4: Suppression of Facts by the Respondent:
The Tribunal agreed with the Commissioner (Appeals) that the respondent had suppressed facts by not filing Service Tax returns as required and failing to pay the due tax. This deliberate non-compliance led to the confirmation of penalties under Sections 76 and 78, while the penalty under Section 77 was deemed unnecessary.

Issue 5: Eligibility for Benefit under Section 80 of the Finance Act:
The appellant alleged that the benefit under Section 80 of the Finance Act was wrongly extended by the Commissioner (Appeals). The Tribunal found no merit in this argument, upholding the decision of the Commissioner (Appeals) and rejecting the appeal.

In conclusion, the Tribunal upheld the order of the Commissioner (Appeals), confirming penalties under Sections 76 and 78, denying the penalty under Section 77, and dismissing the appeal of the department. The judgment was pronounced on 31.07.2018.