2016 (12) TMI 1068 - AT - Service Tax

Construction activity of commercial portion of ISBT - whether the exclusions available under Commercial or Industrial Construction Service for transport terminals can be applied to the commercial portion of the ISBT? - Held that - in terms of Section 65(25b) of Finance Act 1994 the taxable service does not include such service provided in respect of the roads airports railways transport terminals bridges tunnels and dams. Admittedly ISBT is transport terminal which is clearly excluded from the definition of Commercial or Industrial Construction Service for service tax purposes. When the construction of ISBT is not a taxable service there cannot be any bifurcation of that activity for service tax. Decided in favor of the assessee.

Summary

Issues:
1. Service tax liability for construction activity of commercial portion of ISBT.
2. Payment of service tax by M.P. Housing Board on behalf of the respondent.

Analysis:

1. Service Tax Liability for ISBT Construction:
The case involved a dispute over the service tax liability of the respondent for constructing the commercial portion of the Inter-state Bus Terminal (ISBT). The Revenue appealed against the Commissioner (Appeals) order that dropped the demand for service tax related to ISBT construction. The Revenue argued that the exclusion under "Commercial or Industrial Construction Service" for transport terminals should not apply to the ISBT's commercial portion. However, the Tribunal referred to Section 65(25b) of the Finance Act, 1994, which excludes services provided for transport terminals from taxable services. As the ISBT is a transport terminal, it falls outside the definition of taxable services for service tax purposes. Therefore, the Tribunal upheld the lower authorities' decision and rejected the Revenue's appeal on this ground.

2. Payment of Service Tax by M.P. Housing Board:
The second issue revolved around the payment of service tax by the M.P. Housing Board, on whose behalf the respondent carried out commercial construction. The Tribunal noted that the Housing Board had fully discharged the service tax liability, which was not in dispute. The Revenue contended that the respondent should have made the payment instead of the Housing Board. However, the Tribunal found no merit in the Revenue's argument. It cited a previous case where a similar situation led to the rejection of the Revenue's appeal. Given that the service tax liability had been met by the Housing Board and credited towards the respondent's duty liability, the Tribunal dismissed the Revenue's plea for additional payment by the respondent.

In conclusion, after thorough analysis and discussions, the Tribunal found no grounds to interfere with the impugned order. Consequently, the appeal by the Revenue was rejected, and the original order was upheld.