2022 (5) TMI 1250 - AT - Service Tax

Construction for the purpose of Commerce and Industry or not - Hut Bazaar as was constructed by the appellant for Nagar Palika Parishad, Dhamtari - Whether Hut Bazaar was intended as Nagar Palika Parishad, Dhamtari to be used for any commercial gains instead that of the welfare use thereof? - HELD THAT - Clause No. 14 (d) of the Mega Exemption Notification further clarifies that any infrastructure provided for the agricultural produce, the services of construction thereof shall be exempted from the tax liability. The department has not produced any document to show that the stalls of Hut Bazaar were rented out or auctioned to the farmers. Though the show cause notices alleges the amount proposed to be recovered as a liability towards an amount received after auction of Hut Bazaar but there is no single document to support those allegations. The Adjudicating Authority below has denied the money collected by the Government Authorities to whom the services have been provided by the appellant, to be an amount of auction. It is rather mentioned by Commissioner (Appeals) in the order under challenge that the Bazaar Shulk / the nominal fee was lifted w.e.f. 01.04.2018. The issue of collection of nominal fee with respect to the stalls for facilitating the farmers is not an activity of commerce. It is held that Commissioner (Appeals) though had been thoroughly meticulous about the entire demand proposed in the show cause notice but has been wrong while considering the construction of Hut Bazaar as an activity of commerce and industry. Appeal allowed.

Summary

Issues:
Taxability of construction services provided by the appellant for the construction of 'Hut Bazaar' for Nagar Palika Parishad, Dhamtari.

Analysis:
1. The appellant provided construction services to various governmental departments and local bodies. The Revenue Department issued a show cause notice proposing a demand of service tax, which was partially confirmed by the Order-in-Original. The Commissioner (Appeals) partly allowed the appeal, dropping a portion of the demand but confirming a tax liability for the construction of 'Hut Bazaar'. The appellant appealed to the Tribunal challenging this decision.

2. The jurisdiction of the Single Member Bench was objected to by the learned DR, arguing that the issue was about taxability. However, the appellant's counsel contended that the core issue was determining whether the construction of 'Hut Bazaar' was for commerce and industry purposes.

3. The controversy revolved around whether the construction of 'Hut Bazaar' had any element of commerce and industry. The appellant argued that the construction was for welfare purposes, similar to other constructions covered under exemption notifications. The Commissioner (Appeals) confirmed a portion of the tax liability based on the commercial nature of the construction.

4. The learned DR reiterated objections on taxability issues and emphasized specific findings in the order under challenge. The appeal was urged to be dismissed based on these grounds.

5. The Tribunal observed that services provided to governmental or local authorities were exempt from tax liability under specific entries. However, constructions for commercial purposes were held taxable. The construction of 'Hut Bazaar' was deemed taxable by the Commissioner (Appeals) due to its perceived commercial nature.

6. The Tribunal analyzed the relevant notification entries exempting certain constructions from tax liability based on their purpose of use. The core issue was whether the construction of 'Hut Bazaar' was intended for commercial gains or welfare use. Precedents and circulars were cited to support the argument that constructions for facilitating farmers' activities were non-commercial in nature.

7. The Tribunal concluded that the construction of 'Hut Bazaar' was not for commercial purposes, as evidenced by the facilitation of farmers without commercial intent. The demand for tax liability related to this construction was set aside, and the appeal was allowed.

This detailed analysis of the judgment highlights the core issue of taxability concerning the construction services provided by the appellant for the 'Hut Bazaar', emphasizing the distinction between commercial and welfare activities in determining tax liability.