2019 (2) TMI 1360 - AT - Central Excise

Levy of service tax - Commercial or Industrial Construction Service - case of appellant is that the recipient of service i.e. M/s D.S. Green Agro Tech is engaged in agricultural activity and such activities cannot be considered as commerce or industrial activity - Held that - There is no documentary evidence on record to indicate the exact nature of the activities undertaken by the service recipient. The lower authorities have held that such activities are towards commerce or industry. The Original Authority has recorded that the notice to whom the show cause notice was issued has failed to clarify the matter and have not produced any document evidencing the exact nature of the service provided. In view of above, we are unable to take a clear view as to the nature of the activity engaged in by M/s D.S. Green Agro Tech and consequently whether the construction activities undertaken will fall within CICS. The claim of the appellant that the activities are appropriately classifiable under WCS also has not received consideration by both the authorities below who did not examine the claim of the appellant for WCS. The Original Authority is directed to finalize the matter in denovo adjudication within a period of three months from the date of receipt of this order - appeal allowed by way of remand.

Summary

Issues:
1. Whether construction activities undertaken for a party engaged in agricultural activities fall under Commercial or Industrial Construction Service (CICS) for service tax liability.
2. Whether the construction activities can be classified under Works Contract Service (WCS) instead of CICS.
3. Whether the allegation of suppression against the appellant is sustainable.

Analysis:
1. The appellant, a partnership firm engaged in construction activities, was found to have not discharged service tax for construction activities undertaken for a party named M/s D.S. Green Agro Tech. The Department alleged that the activities fell under CICS, leading to a show cause notice and subsequent orders for payment of service tax and penalties. The appellant contended that since M/s D.S. Green Agro Tech was engaged in agricultural activities, the construction activities did not qualify as commercial or industrial. However, lack of documentary evidence regarding the nature of the recipient's activities led the Tribunal to remand the matter for further examination by the Original Authority.

2. The appellant also argued that the construction activities could be classified under WCS instead of CICS, citing a Supreme Court decision. The Tribunal noted that this claim was not considered by the lower authorities and that the relevant Supreme Court decision was pronounced after the show cause notice was issued. Consequently, the matter was remanded for the Original Authority to assess the appellant's claims for classification under WCS and to consider any time bar defense raised by the appellant.

3. The appellant further contended that the allegation of suppression was not sustainable as they believed in good faith that agricultural activities did not constitute commercial or industrial activities. The Departmental Representative defended the impugned order, asserting that the recipient's activities were commercial. However, the Tribunal found the lack of clarity on the recipient's activities and directed the Original Authority to reexamine the issue, giving the appellant an opportunity to provide additional documentary evidence and clarifications within a specified timeframe for a fresh adjudication.