2013 (9) TMI 517 - AT - Service Tax

Commercial or Industrial Construction Service as defined under section 65(25b) of the Finance Act, 1994 - Activities primarily are digging of land, extraction of core and soil stabilization and do not fall under category of Industrial or Commercial Construction Service. He further submits that their activities fall under Site Formation & Clearance, Excavation, Earth moving & Demolition Services as defined under section 65(97a). Since Reservoir is a water body, no service tax is leviable as water bodies are excluded from levy of service tax under section 65(97a) - Appellant has executed three agreements dated 11.05.2000 as amended 17.10.2000, 05,04,2005 and 21.11.2006 with M/s Radius Water Ltd - Held that - Activities undertaken by the appellant are out of purview of Site Formation, and Clearance Excavation and Earthmoving and Demolition Service as defined under Section 65(97a) of the Act. On the other hand activities mentioned in para 7.1 of the Order in Original are in nature of construction of civil structure which is further supported by the fact that entries in the balance sheet are under the Heading Construction Receipts - Appellant are covered under category of Commercial or Industrial Construction service as defined under Section 65(25b) of the Finance Act Decided against the Assessee. Appellant is eligible for 67% abatement of gross amount in terms of Notification 15/2004 dated 10.09.2004 as amended by Notification 1/2006 dated 01.03.2006 Held that - Land and electricity was supplied free to the appellant. In such a case appellant is not eligible for the benefit of abatement under Notification 15/2004 as amended by 1/2006 dated 01.03.2006 Decided against the Assessee. Extended period of limitation Held that - Appellant has not disclosed the value, did not take registration and also did not file any Returns to the department. In such a case extended period has rightly been invoked by the Commissioner and consequently the appellant is liable to penalty under Section 78 of the Act Decided against the Assessee.

Summary

Issues:
1. Whether the activities of the appellant fall under Industrial or Commercial Construction Service or Site Formation and Clearance, Excavation Earthmoving & Demolition Services.
2. Eligibility of the appellant for abatement under Notification 15/2004.
3. Validity of the invocation of the extended period by the Commissioner.

Issue 1:
The appellant, a 100% Export Oriented Unit for cultured pearls, was found to have shown income from 'Construction Receipts' in their Profit and Loss Account. The Department alleged that the appellant provided Commercial or Industrial Construction Service, demanding service tax. The appellant argued that their activities primarily involved excavation, soil stabilization, and reservoir maintenance, not falling under Industrial or Commercial Construction Service. The Revenue contended that the activities constituted Industrial or Commercial Construction services due to the extensive civil construction involved. The Tribunal found that the agreements executed by the appellant indeed required extensive civil construction work, including various construction activities related to reservoirs and other structures. The Tribunal concluded that the appellant's activities fell under the category of Commercial or Industrial Construction service as defined under the Finance Act.

Issue 2:
The appellant claimed eligibility for 67% abatement under Notification 15/2004, which allows for a reduced service tax payment if the gross amount includes the value of goods and materials provided. However, as the appellant received free land and electricity, they were deemed ineligible for the abatement. The Tribunal upheld this decision, stating that the appellant could not benefit from the abatement due to the provision of land and electricity without cost.

Issue 3:
The appellant challenged the invocation of the extended period by the Commissioner, arguing that they had not disclosed the value, registered, or filed returns. The Tribunal found that the Commissioner was justified in invoking the extended period due to the appellant's lack of disclosure and compliance. Consequently, the appellant was held liable for penalties under Section 78 of the Act. The Tribunal upheld the Commissioner's decision and dismissed the appeal, affirming the penalty under Section 78.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's findings on each matter, preserving the legal terminology and significant details from the original text.