2013 (2) TMI 584 - AT - Service Tax

Commercial or Industrial Construction Service - whether the Sports Complex Stadium constructed for the purpose of holding games can be considered as a commercial or industrial construction, merely on the ground that the stadium is used by the public and others later on, on payment of user charges - Held that - Public utility means any work, project which is going to be useful to the members of the public at large. The public benefit aided at or intended to be secured need not be to the whole community but to a considerable number of people. Sports Stadia is used in public purpose. Merely because some amount is charged for using the facility, it cannot become a commercial or industrial construction. Even in a Children Pak, entry fee is levied for maintenance of the Park. Merely because some amount is charged for using the Park, it cannot be said that it is a commercial or industrial construction. Adopting the same logic, the Sports Stadia in the present case is also a non-commercial construction for use by the public. Therefore, the Sports Stadium constructed for conducting Commonwealth Games, is a non-commercial construction. The appellant has made out a strong case for complete waiver of pre-deposit of dues adjudged. Thus unconditional waiver of the pre-deposit of dues adjudged and stay recovery thereof during the pendency of the appeal. Since the amount involved in this case is more than Rs. 1 crore, the application for early hearing of the appeal filed by the appellant is allowed and the Registry is directed to list the same for final hearing on 14.3.2013.

Summary

Issues:
1. Whether the construction of a Sports Stadium Complex by the appellant constitutes 'Commercial or Industrial Construction' as per Section 65(25b) of the Finance Act, 1994.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI challenged the Order-in-Original passed by the Commissioner of Central Excise, Pune-III regarding the construction of a Sports Stadium Complex by the appellant for the Government of Maharashtra. The main issue was whether this construction falls under the definition of 'Commercial or Industrial Construction Service' as per the Finance Act, 1994. The adjudicating authority confirmed a demand under Section 73 of the Act, stating that the facility constructed is for commercial use. The appellant argued that the construction was for public welfare and not commercial or industrial purposes, supported by certificates and affidavits from relevant authorities.

The appellant relied on circulars issued by the Board to support their claim that if constructions are primarily for non-commercial purposes, they are not taxable. The appellant highlighted that even if a construction is later rented out for commercial purposes, it does not change its non-commercial nature. The appellant contested the duty demand based on a letter from CBE&C, arguing that the construction was not primarily for commerce or industry. The Addl. Commissioner reiterated the findings of the adjudicating authority.

The Tribunal analyzed the submissions and relevant legal provisions. They noted that the Sports Stadium Complex was a public facility for recreation and did not qualify as commercial or industrial construction. Referring to legal precedents, the Tribunal emphasized that public utility works benefit the public at large and do not necessarily constitute commercial constructions. They compared the stadium to a Children Park where entry fees are charged for maintenance, indicating that charging for use does not make it commercial. Therefore, the Tribunal held that the Sports Stadium Complex was a non-commercial construction for public use.

Consequently, the Tribunal granted a complete waiver of the pre-deposit of dues adjudged and stayed the recovery during the appeal. As the amount involved exceeded Rs. 1 crore, the application for early hearing was allowed, scheduling the final hearing for a specific date. The judgment was dictated and pronounced in court by the Tribunal.