2023 (9) TMI 1094 - AT - Service Tax

Levy of Service tax - Maintenance and repair of roads - construction service rendered to HUDCO - hiring of machinery - renting of immovable property - penalty - HELD THAT - Service Tax on the activity of management, maintenance and repairs of roads has been exempted retrospectively for the period 16.06.2005 to 26.07.2009, by insertion of Section 97 in the Finance Act, 1994 by the Finance Act, 2012 - the impugned order was passed by the Commissioner, Service Tax, Kolkata on 29.02.2012 and that the amendment was made on 28.05.2012, providing special exemption to the management, maintenance or repair of roads. Such exemption has been specifically provided to the service provided between 16th June, 2005 to 26th July, 2009. In view of the amended provision made applicable with retrospective effect, the demand of service tax of Rs. 2,17,05,694/-confirmed in the impugned order is not sustainable. Service tax on construction service rendered to HUDCO - HELD THAT - The Appellant has constructed Office building for HUDCO at D.J. Block, Salt Lake, for their own use. During the relevant period, service tax was chargeable on construction services when the building is used for commercial and industrial purpose - HUDCO is a Government of India Enterprise incorporated with an intent to undertake housing and urban development of the country. HUDCO undertakes its activities for the upliftment of society and for urban development of the country. Hence the office building constructed for HUDCO cannot be considered for industrial or commercial purpose. As the building is used by HUDCO for official purpose it cannot be equated with a building for commercial, trade and industry. Accordingly, the demand of service tax of Rs. 14,86,562/-confirmed in the impugned order is not sustainable. Levy of service tax on hiring of machinery - HELD THAT - The Appellant has claimed that the machinery was supplied with rights of possession and effective control thereof and hence it would not fall under the taxable service of Supply of tangible goods. However, it is observed that the claim of Appellant was not supported by any documentary evidence - the impugned order has confirmed the demand on this service only for the period 16.05.2008, ie, after introduction of supply of tangible goods service. Accordingly, the demand of service tax on this count, along with interest upheld. Service Tax on renting of immovable property - HELD THAT - The rent was received in the name of the proprietory firm during the relevant period. After expiry of Mr. Uttam Chand Chethia, the wife of the Appellant has taken over the responsibility as the legal heir. Hence, she is liable to pay service tax on the rent received during the relevant period. Accordingly, the demand confirmed in the impugned order on this count, along with interest upheld. Penalty u/s 77 and 78 of the Finance Act, 1994 - HELD THAT - There was no evidence brought on record to establish suppression of fact with an intention to evade payment of service tax. Accordingly, it is a fit case for invoking section 80 of the Finance Act, 1994 to waive the penalties imposed in the impugned order. The demand of service tax of Rs. 3,99,282/- on hiring charges and Rs.39, 601/-renting of immovable service along with interest upheld - demand on maintenance and repair of roads set aside - demand on construction service rendered to HUDCO confirmed - appeal allowed in part.

Summary

Issues Involved:
The issues involved in this case include the demand for service tax on various services provided by the appellant, such as maintenance and repair of roads, construction services rendered to a government entity, hiring of machinery, and renting of immovable property.

Maintenance and Repair of Roads:
The appellant, engaged in construction activities, contested the service tax demand on the management, maintenance, and repair of roads provided to the National Highways Authority of India. They argued that service tax on such activities had been exempted retrospectively for a specific period. Citing relevant tribunal decisions, they claimed that the demand was not sustainable. The tribunal held that the demand of Rs. 2,17,05,694/- was not sustainable due to the retrospective exemption.

Construction Service Rendered to HUDCO:
Regarding the construction of an office building for HUDCO, a government entity, the appellant argued that since the building was used for official purposes and not for commercial or industrial activities, the service tax demand was not justified. The tribunal agreed, stating that the demand of Rs. 14,86,562/- was not sustainable as the building was not intended for commercial or industrial use.

Hiring of Machinery:
The appellant disputed the service tax demand on machinery hiring, claiming that the machinery supplied did not fall under the taxable service of 'Supply of tangible goods.' However, the tribunal found that the appellant failed to provide supporting evidence for this claim. The demand of Rs. 3,99,282/- was upheld along with interest.

Renting of Immovable Property:
Regarding the service tax demand on renting immovable property jointly owned by the appellant and his brother, the appellant argued that as the property did not solely belong to the firm and was jointly owned, service tax was not applicable. However, the tribunal held that the legal heir of the deceased appellant was liable to pay service tax on the rent received during the relevant period. The demand of Rs. 39,601/- was upheld along with interest.

Penalties Imposed:
The tribunal noted that there was no evidence of suppression of facts to evade payment of service tax. Therefore, the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, were waived under Section 80 of the Act. The tribunal modified the impugned order, upholding certain service tax demands while setting aside others, based on the discussions and evidence presented during the proceedings.