2018 (2) TMI 811 - AT - Service Tax

Commercial or Industrial Construction Service - building constructed was not used for commercial purposes and the construction services rendered by appellant did not fall under the definition of Commercial or Industrial Construction Service - Held that - Merely because there is some common facility for the benefit of members, it cannot be said that the building is for trade or commerce. The plan approved shows that building constructed is for training centre. Board vide its Circular No. 80/10/2004-ST clarified that the information as to purpose for which the building / construction is used has to be gathered from the plan approved by the concerned authorities. In the instant case, the plan approval shows that the building is approved for the use as training centre - the building is a Government building which is used for creating a facility of training, testing etc. for industrial units, in consonance with the Board circular, the building cannot be said to be a commercial building. The appellant succeeds on merit. It is not necessary to deal with the issue of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the building constructed by the appellant falls under the category of Commercial or Industrial Construction Service?
2. Whether the finding of the Commissioner (Appeals) regarding the usage of the building for commercial purposes is justified?
3. Whether the demand for service tax along with interest and penalty imposed on the appellant is sustainable?
4. Whether the appellant's argument regarding limitation holds merit?

Analysis:

Issue 1:
The appellant, engaged in providing services under Commercial or Industrial Construction Service, constructed a building for a special purpose institution. The original authority dropped the proceedings, stating that the building was not used for commercial purposes. However, the Commissioner (Appeals) confirmed the demand for service tax, interest, and penalty. The appellant contended that the building was used as a training center and not for commercial purposes. The appellant also relied on a Board Circular clarifying commercial construction. The Tribunal examined the definition of Commercial or Industrial Construction Service and concluded that the building, approved for use as a training center, did not qualify as a commercial building.

Issue 2:
The appellant argued that the Commissioner (Appeals) exceeded the scope of the show cause notice by considering the purpose of creating common facilities for industrial units in Coimbatore. The Tribunal disagreed, stating that the Memorandum of Association was a basis for the show cause notice, and the building was intended for Government purposes, not commercial activities. The Tribunal upheld that the building, approved for use as a training center, did not meet the criteria for a commercial building.

Issue 3:
The ld. AR contended that the building was used for commercial activities based on the Memorandum of Association. However, the Tribunal found that the approved plan indicated the building's use as a training center, aligning with the Board Circular exempting non-commercial constructions. As the building served educational and training purposes for industrial units, the Tribunal set aside the demand for service tax, interest, and penalty.

Issue 4:
The appellant raised the issue of limitation, citing a case to support their belief that construction for Government purposes was not taxable under commercial construction services. The Tribunal did not delve into the limitation issue as it found in favor of the appellant on merit, concluding that the building was not a commercial structure. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the key issues, arguments presented, and the Tribunal's findings, providing a comprehensive understanding of the legal aspects involved in the case.