9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (7) TMI 1039 - AT - Service TaxConstruction of complex service - the entire defence of the appellant is based on the arguments that MHADA is a philanthropic/non-profit organisation and therefore, the activities conducted by them are not of commercial nature - Ministry of Finance Circular No.B2 8/82004-TRU dated 10/09/2004 - Held that - The clarification relied upon by the appellant in Circular dated 10/09/2004 is a clarification issued with reference to commercial and industrial construction service. The demand has however been issued under construction of complex service as defined under Section 65 (30 a) of the Finance Act, 1994 in respect of construction of residential complex, commercial or otherwise nature of the construction is irrelevant - The so-called bonafide belief of the appellant was based on the non-commercial nature of MHADA. It can be seen from the definition above that the word commercial itself does not figure in the said definition - appeal dismissed - decided against appellant.
Issues:
Appeal against demand of service tax, interest, and penalty under Section 70, 77 & 78 of the Finance Act for construction services provided to MHADA Aurangabad from Oct 2008 to March 2010. Analysis: The appellant, M/s. Deogiri Infrastructure Pvt. Ltd., argued that the services provided to MHADA were exempt from service tax as they were for philanthropic purposes. They contended that since MHADA operates for noble causes without profit motives, service tax exemption should apply. The appellant did not charge service tax to MHADA based on the belief that the construction of residential complexes for welfare purposes falls under non-commercial activities. They also cited a Ministry of Finance Circular to support their argument. The appellant claimed that the extended period for demand cannot be invoked due to their genuine belief in the exemption. The Appellate Tribunal examined the appellant's defense and noted that the argument was centered around MHADA being a philanthropic organization, thus claiming exemption from service tax. However, the Tribunal highlighted that the definition of "construction of complex service" does not mention commercial nature as a criterion. The Tribunal pointed out that the Circular referred to by the appellant pertained to commercial and industrial construction services, not construction of residential complexes. Therefore, the Tribunal concluded that the appellant's belief based on the non-commercial nature of MHADA was unfounded as the definition of the service did not include commerciality as a determining factor. Consequently, the Tribunal dismissed the appeal, stating that the appellant's purported bonafide belief lacked merit as it was not supported by the legal framework governing the construction of residential complexes. The Tribunal emphasized that the absence of the term "commercial" in the definition of construction services meant that the commercial nature of the organization receiving the services was irrelevant. Therefore, the Tribunal found no basis for the appellant's belief and upheld the demand for service tax, interest, and penalty. The appeal was dismissed by the Tribunal.
|
