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2023 (6) TMI 953 - AT - Service TaxLevy of Service Tax - construction of residential complex for Indian Army and West Bengal Power Development Corporation Limited, the West Bengal Government Undertaking - contention of the assessee is that vide CBEC Circular No.332/16/2010-TRU dated 24.05.2010, which clarified that in case the Government of India is service recipient and the service provided is directly to the Government of India for its personal use, the service tax is not leviable. HELD THAT - It is not in dispute that the assesse is engaged in the construction of flat for Indian Army and West Bengal Power Development Corporation Limited and these residential complexes are for personal use of Indian Army and WBPDCL. The CBEC has clarified vide its Circular No.332/16/2010-TRU dated 24.05.2010, which holds that if the NBCC, being a party to a direct contract with GOI, engages a sub-contractor for carrying out the whole or part of the construction, then the sub-contractor would be liable to pay service tax as in that case, NBCC would be the service receiver and the construction would not be for their personal use. As it is not in dispute that the residential flats constructed by the assessee, are for personal use of Indian Army and WBPDCL, which are a part of Government of India/State Government. Therefore, the said service provided by the assessee is to Government of India for personal use. Therefore, in the light of the CBEC Circular No.332/16/2010-TRU dated 24.05.2010, the assessee is not liable to pay service tax. The impugned demand confirmed against the assessee is set aside. Consequently, the appeals filed by the assesse are allowed - As no demand is sustainable against the assesse, therefore, question of imposing penalty does not arise. There are no merit in the appeal filed by the Revenue and the same is dismissed.
Issues:
The issues involved in the judgment are the confirmation of demand of service tax along with interest, imposition of penalty under Sections 76 and 77 for short payment of service tax, and the liability of the appellant to pay service tax for the construction of residential complexes for Indian Army and West Bengal Power Development Corporation Limited. Confirmation of Demand of Service Tax: The appellant was engaged in the construction of residential complexes for Indian Army and West Bengal Power Development Corporation Limited. The Revenue contended that the appellant is liable to pay service tax under the category of "construction of residential complex." The impugned proceedings were initiated, and demand of service tax was confirmed along with interest. However, a portion of the penalty was not imposed. Both sides appealed against the order. Liability to Pay Service Tax: The appellant argued that as per CBEC Circular No.332/16/2010-TRU, when the Government of India is the service recipient and the service provided is directly to the Government for its personal use, service tax is not leviable. They claimed they are contractors, not sub-contractors, engaged by Indian Army and West Bengal Power Development Corporation Limited for the construction of residential complexes. Referring to a previous tribunal case, they contended that service provided directly to the Government of India for end use of residential complexes by the Government is not subject to service tax. Therefore, they argued they are not liable to pay service tax. Decision and Rationale: The Tribunal noted that the residential flats constructed by the appellant were for the personal use of Indian Army and WBPDCL, which are part of the Government of India/State Government. Citing the CBEC Circular and a previous tribunal case, it was concluded that the service provided by the appellant was to the Government of India for personal use, making them not liable to pay service tax. Consequently, the impugned demand was set aside, and the appeals filed by the appellant were allowed. Since no demand was sustainable against the appellant, the question of imposing a penalty did not arise. The appeal filed by the Revenue was dismissed.
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