2020 (10) TMI 474 - AT - Service Tax

Non-payment of Service tax - Commercial Industrial Construction service - period 1/4/2007 to 31/3/2012 - suppression of facts or not - Extended period of Limitation - HELD THAT - The appellant provided construction service in all the cases with material. The perusal of work order/agreements show that all the construction services in dispute is with material. Therefore, the counsel for the appellant correctly submitted that the services fall under Works Contract Service and not under Commercial or Industrial Construction Service . The construction of common Amenities building for Kishangarh Hi-Tech Textile Park was constructed for providing training and welfare facilities to the worker employed. KHTPL is not a commercial entity but a body created by Ministry of Textile for providing common infrastructure to textile industries. There is force in appellant s submission that the construction service done by the appellant is with material and it had paid VAT on works contract as per Rajasthan VAT Act. Therefore it would fall under works contract service . The service provided by the appellant falls under Works Contract Service but the department has classified the service under Commercial or Industrial Construction Service and not under Work Contract Service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of construction services under Commercial & Industrial Construction Service (CICS) or Works Contract Service.
- Taxability of construction services provided for social, religious, and government purposes.
- Application of exclusion clauses in the definition of Residential Complex Services.
- Bar on demand due to limitation period and absence of suppression of facts.

Classification of Construction Services:
The appellant, a partnership firm registered for construction services, was issued a show cause notice for alleged non-payment of service tax. The appellant argued that the services provided were under Works Contract Service, not Commercial & Industrial Construction Service (CICS). The Tribunal found that all construction services were done with material, falling under Works Contract Service. The construction for Kishangarh Hi-Tech Textile Park was for staff welfare, not commercial purposes, supported by relevant certificates. The Tribunal referenced various judgments supporting this classification and set aside the show cause notice and Order-in-Original.

Taxability of Construction Services:
The appellant contended that construction for social and religious purposes, like Maheshwari Samaj and government quarters, should not be taxable under CICS. They cited exclusion clauses and case laws to support their argument. The Tribunal agreed, stating that construction for government employees' residences falls under Residential Complex Services exclusion. The construction for Kishangarh Hi-Tech Textile Park was deemed for staff welfare, not commercial use, aligning with the purpose of the entity.

Application of Exclusion Clauses:
The appellant highlighted that construction for government use, like police quarters, should be excluded from service tax liability. They referenced case laws supporting this argument. The Tribunal acknowledged that construction for government employees' residences falls under the exclusion clause of Residential Complex Services, further strengthening the appellant's position.

Bar on Demand Due to Limitation:
The appellant argued that a significant part of the demand was time-barred due to the absence of suppression or misstatement. They cited judgments to support their claim. The Tribunal considered this argument but primarily focused on the classification of services under Works Contract Service, ultimately leading to the allowance of the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, classifying the construction services under Works Contract Service and setting aside the show cause notice and Order-in-Original due to incorrect classification under CICS.