2019 (5) TMI 663 - AT - Service Tax

Taxability - construction of multilevel parking - demand was raised under the category of Commercial and Industrial Construction Services - whether the service is properly classified under Commercial and Industrial Construction Services or under works contract services - commercial activity or not - HELD THAT - There is no dispute that such multilevel parking stands constructed by the respondents for Lucknow Development Authority, whose main function is to provide public facilities. The multilevel parking are made for reducing traffic conditions and parkings on the road and is for betterment and development of the city. It cannot be said to be a commercial activity so as to tax the same. There are no justifiable reasons to interfere with the impugned order of Commissioner - appeal dismissed - decided against Revenue.

Summary

Issues:
Taxability of construction of multilevel parking under Commercial and Industrial Construction Services vs. works contract category; Whether construction of multilevel parking for a development authority constitutes a commercial activity.

Analysis:
The appeal concerns the taxability of constructing multilevel parking under a contract with a development authority. The dispute revolves around whether the activity falls under Commercial and Industrial Construction Services or the works contract category. The Original Adjudicating Authority dropped the demand, citing that the construction for the development authority cannot be deemed a commercial activity. The authority highlighted that the development authority's purpose is to provide public amenities, such as multilevel parking, for the welfare of the public. The authority reasoned that even though a nominal fee may be charged, the primary objective remains public welfare, not profit generation.

The Tribunal upheld the Original Adjudicating Authority's decision, emphasizing that constructing multilevel parking for a development authority, like the Lucknow Development Authority, aims to enhance public facilities and alleviate traffic issues. The Tribunal concurred that such projects are not commercial ventures but serve the public interest. Therefore, the Tribunal found no grounds to overturn the Commissioner's order.

In conclusion, the Tribunal rejected the revenue's appeal, affirming that constructing multilevel parking for a development authority does not constitute a commercial activity subject to taxation. The Tribunal's decision underscores the public welfare aspect of such projects and their non-commercial nature, ultimately upholding the Commissioner's order.