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2021 (8) TMI 294 - AT - Service TaxLiability of service tax - appellant who has constructed houses for rehabilitation of poor people under JNNURM - services provided by the notice to Agra Development Authority (ADA) under Jawaharlal Nehru Renewal Mission (JNNURM) for construction of houses for weaker section of society - period from 2009-10 to 2010-11(up to 30.06.2010) before issuance of Notification No. 28/2010-ST dated 22.06.2010 (w.e.f. 01.07.2018) - services provided by the noticee to Rajya Krishi Utpadan Mandi Parishad during 2013-14 - construction work under Works Contract - Sl. No. 12(a) of N/N. 25/2012-ST dated 20.06.2012 - Taxability of services provided to M/s Uncle Builders - demand of interest and penal action against Noticee. Exemption claimed for services to ADA, JNNRUM during the financial year 2009-10 to 2010-11 (up to 30 June, 2010) i.e. before issuance of N/N. 28/2010-ST - HELD THAT - The various construction works carried out for Mandi Parishad are not liable to service tax and are exempted in view of the Education Guide dated 20 June, 2012 by the Board, read with Circular No.89/7/2006 dated 18 December, 2006, read with the Mega Exemption Notification No.25/2012-ST. Tax liability for work done for Uncle Builders (from 2009-10 to 2010-11) - HELD THAT - Admittedly the appellant have paid tax on 04 June, 2006 along with interest before the issuance of SCN (issued on 31 March, 2016). Further, the issue is wholly interpretational as per the findings of the Tribunal. There is no tax liability on the appellant in respect of various construction works done for government/statutory authority under JNNURM, canal work for water resources division, for construction done for Mandi Samiti etc. Extended period of limitation - HELD THAT - Admittedly, appellant have maintained books of account and filed regular returns. Further, Revenue have erred in adopting Form 26AS for calculating tax liability, which is patently wrong, as Form 26AS is not a prescribed document in the service tax rules for ascertaining the gross turnover of the assessee. Further, neither the books of account nor the returns filed have been rejected. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Exemption from Service Tax for services provided under JNNURM for the period 2009-10 to 2010-11. 2. Exemption from Service Tax for services provided to Mandi Parishad during 2013-14. 3. Taxability of services provided to M/s Uncle Builders during 2009-10 & 2010-11. 4. Demand of interest and penal action against the appellant. Issue-Wise Detailed Analysis: 1. Exemption from Service Tax for Services Provided Under JNNURM (2009-10 to 2010-11): The primary issue was whether the appellant was entitled to an exemption from service tax for constructing houses under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for the period before the issuance of Notification No. 28/2010-ST dated 22 June 2010. The Commissioner observed that the exemption was only available from 01 July 2010, as per the notification. The appellant argued that the houses were for personal use by the Agra Development Authority (ADA), which leased them to beneficiaries at nominal rent. However, the Commissioner held that the condition for personal use was not fulfilled as ADA leased out the houses, and thus, the exemption was not applicable for that period. 2. Exemption from Service Tax for Services Provided to Mandi Parishad (2013-14): The second issue involved the taxability of construction services provided to the Rajya Krishi Utpadan Mandi Parishad (Mandi Parishad) under Notification No. 25/2012-ST. The Commissioner ruled that Mandi Parishad, although formed under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, was not a government authority performing municipal functions as per Article 243W of the Constitution and was operating on a commercial basis. Consequently, the exemption was not granted. The appellant contended that the construction services provided, such as toilets, roads, and drainage, were non-commercial and should be exempt under the notification. The Tribunal agreed with the appellant, referencing the Education Guide dated 20 June 2012 and Circular No. 89/7/2006, which clarified that services provided to statutory bodies like Mandi Parishad were exempt from service tax. 3. Taxability of Services Provided to M/s Uncle Builders (2009-10 & 2010-11): Regarding the services provided to M/s Uncle Builders, the appellant had paid the service tax along with interest before the issuance of the Show Cause Notice (SCN). The Tribunal found that the issue was interpretational and noted that the appellant had already complied with the tax payment. Therefore, no further tax liability was imposed on the appellant for these services. 4. Demand of Interest and Penal Action: The Tribunal addressed the demand for interest and penalties under Sections 77 and 78 of the Finance Act. It was held that the extended period of limitation was not applicable as the appellant had maintained proper books of account and filed regular returns. The Tribunal criticized the Revenue for relying on Form 26AS, which is not a prescribed document for service tax assessment, and emphasized that tax liability should be based on actual records like bills, invoices, and bank statements. Consequently, the Tribunal set aside the impugned order, allowing the appeal and entitling the appellant to consequential benefits according to the law. Conclusion: The Tribunal concluded that the appellant was entitled to exemptions for construction services provided under JNNURM and to Mandi Parishad, and no further tax liability was imposed for services provided to M/s Uncle Builders. The demand for interest and penalties was also set aside, and the appeal was allowed, granting the appellant consequential benefits.
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