2024 (6) TMI 347 - AT - Service Tax

Levy of service tax - construction services provided - benefit of N/N. 17/2005 dated 07.06.2005 - Extended period of limitation - HELD THAT - Bare perusal clarifies that activity of construction of road which is meant for use by general public is exempted from whole duty. Admittedly appellant constructed car race track. Whether such track can be called as road for use by general public. What is exempted in the Notification No. 17/2005 is the service as named in Entry No. 13 thereof for construction of road for use of general public but not the services for constructing road simpliciter. Emphasis therein is on the word public . Public place is defined in Section 2(34) of Motor Vehicles Act as a road street way or other place whether a thoroughfare or not to which the public have a right of access - in order that a place may fall within the ambit of the definition of public place the element of right of access of public on such road is a necessary concomitant. To hold that this definition is intended to rope in places where public have no right of access would amount to enlarge the definition to an unrecognisable proportion and in such a case every private place may have to be regarded as public place . The race track constructed by appellant is definitely a Road . But to avail the benefit of the Notification no. 17/2005 appellant should have constructed a road meant for use of public i.e. a public road/place. The race track constructed by appellant is apparently and admittedly is not meant for public access as a matter of right. In the light of discussion about definition of public place above it is held that though impugned race track is a road but public has no access as a matter of right thereupon. Hence the impugned race tracks are not meant for public use hence are not covered under Entry No. 13 of Notification 17/2005. The appellant is held to have wrongly availed the exemption under said notification. Extended period of limitation - HELD THAT - Since it stands established on record that the appellant paid no tax by wrongly claiming the benefit of notification 17/2005 it is held to be clear case of misrepresentation. Accordingly it is held that extended period has rightly been invoked by the department while issuing the impugned show cause notice. The miniscule demand has been dropped by the original adjudicating authority. The department is not in appeal against the same. Appeal dismissed.

Summary

Issues involved: The issues involved in the judgment are the liability of the appellant for service tax on construction services provided, the invocation of the extended period for tax recovery, and the applicability of Notification No. 17/2005 for exemption from service tax.

Liability for Service Tax: The officers of DGCEI, Delhi Zonal Unit, New Delhi conducted investigations on M/s Paramount Infraventures Pvt., Ltd. for allegedly not discharging their service tax liability for construction services provided for F-1 Race Track. Show Cause Notice was issued proposing recovery of service tax amounting to Rs.2,24,29,175/- for the period November, 2005 to March, 2012. The appellant challenged the notice, claiming exemption under Notification No. 17/2005 for specific construction works. The appellant argued that the services provided were for public welfare and not commercial, hence not taxable under Section 65(105)(zzzza).

Invocation of Extended Period: The appellant contested the invocation of the extended period for tax recovery, stating that they had completed the work before the F-1 Race event in October, 2011. They claimed to have a bona fide belief that no service tax was applicable on the work related to the event. The appellant argued that there was no suppression with intent to evade tax, and hence, the extended period was wrongly invoked.

Applicability of Notification No. 17/2005: The appellant relied on Entry No. 13 of Notification No. 17/2005 dated 07.06.2005 for exemption from service tax. The notification exempts services provided for the construction of roads for public use. The Tribunal analyzed the definition of "public place" and concluded that the race track constructed by the appellant, while meeting the definition of a road, did not provide public access as a matter of right. Therefore, the Tribunal held that the appellant wrongly availed the exemption under the said notification.

Conclusion: The Tribunal upheld the order, dismissing the appeal. It was determined that the appellant had wrongly claimed the benefit of Notification No. 17/2005, leading to a clear case of misrepresentation. The extended period for tax recovery was deemed rightly invoked, and the demand was upheld. The decision was based on the findings of the adjudicating authority and the application of relevant legal principles.