2018 (2) TMI 1125 - AT - Service Tax

Commercial or Industrial Construction Services - demand pertains to 4 construction projects undertaken by the appellants viz. (a) Era Business School, (b) National Automotive Testing and R& D Infrastructure Projects, (c) Office Building for Naya Raipur Development Authority and (d) Hostel for NIT Calicut. Era Business School - Held that - Era Education School is imparting only education and the same cannot be considered as a commercial activity. Therefore, for the project carried for construction of Era Business School cannot be taxed under Commercial or Industrial Construction Service - demand set aside. National Automotive Testing and R& D Infrastructure Projects - Held that - although the said centre has been registered with the Government but the said centre is not recognized as a centre for testing the vehicles for homologation by the Government of India. The said testing centre is charging money for testing and giving its reports. The said activity is commercial in nature - demand upheld. Office Building for Naya Raipur Development Authority - Held that - From the scope of the project undertaken by the appellant for construction of building for Naya Raipur Development Authority, who involves in commercial activity of sale and purchase of land qualifies to be taxed under the category of Commercial and Industrial Construction Service - demand upheld. Hostel for NIT Calicut - Held that - the construction of the said hostel cannot be considered as construction of building which is used for business commerce or commercial building. In that circumstance, for the said project, the appellant is not liable to pay service tax - demand set aside. Appeal allowed in part.

Summary

Issues:
Appeal against demand for service tax on construction projects categorized as "Commercial or Industrial Construction Services."

Analysis:
The appellant challenged the demand for service tax amounting to ?10,45,18,675 on 4 construction projects: Era Business School, National Automotive Testing and R&D Infrastructure Projects, Office Building for Naya Raipur Development Authority, and Hostel for NIT Calicut. The Revenue contended that all projects fell under "Commercial and Industrial Construction Service," leading to issuance of show cause notices and subsequent confirmation of demand with interest and penalties. The appellant argued that Era Business School is an educational institution, National Automotive Testing Centre is for statutory vehicle testing, Naya Raipur Development Authority is governmental, and NIT Calicut Hostel is for student accommodation, hence not commercial. The Revenue supported the impugned order.

The Tribunal analyzed each project separately:
- Era Business School: Recognized educational institution imparting degrees, not commercial; demand set aside.
- National Automotive Testing Centre: Charges for testing, commercial activity; liable for service tax.
- Naya Raipur Development Authority: Engaged in land activities, shown in business model, qualifies as commercial; liable for service tax.
- Hostel for NIT Calicut: Residential purpose for students, not commercial; demand set aside.

Consequently, the Tribunal held the appellant liable for service tax on National Automotive Testing and R&D Infrastructure Projects and office building for Naya Raipur Development Authority, while exempting Era Business School and NIT Calicut Hostel projects from service tax liability. The appeals were partly allowed based on the above analysis.