9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 765 - AT - Service TaxExemption from service tax - Classification of services provided by M/s Chinki Construction Private Limited as a sub-contractor - commercial and industrial services or not - HELD THAT - The scope of work in as many as 4 of the LOA s relate to construction of the infrastructure for the power station while one relates to provisioning of the residences for the employees of BSEB. None of these can certainly be said to be concerned with construction falling within the ambit of any commercial activity. BSEB being a 100% subsidiary of the Government of Bihar falls well within the scope of a government body and hence would lie within the ambit of clarification issued vide the said circular 80/10/2004-ST dated 17.09.2004 to suggest and indicate it as of non-commercial in nature and thereby not leviable to tax. Further vide its circular no.147/16/2001 dated 21.10.2011 issued by the CBEC in the context of commercial construction/infrastructure development projects of roads airports dams tunnels etc. regarding levy of Service Tax on various service providers engaged/associated with such construction work it is clarified that the service provided by the sub-contractor to the main contractor under works contract service would be eligible to avail the exemption as available to the main contractor providing Works Contract Service in relation to the said projects. The Revenue has made the allegations merely by combining different services viz. construction services (commercial or industrial) as defined under Section 65(25b) construction of residential complex service as defined under section 65(105)(zzzh) read with 65(30a) and site formation services as defined u/s 65(105)(zzza) read with Sec.65(97a) of the Finance Act 1994 without recording transaction made in each taxable services and without calculating value tax on individual categories of services separately in distinguishable manner of applicability of classification as mandated in law before 30.06.2012 i.e. before introduction of Negative List . It appears that the revenue has simply overlooked the various legal provisions relatable to execution of a works contract and clarifications as issued by way of circulars referred in earlier paras have resorted to this sort of an exercise merely for the sake of issuing the demand note. Therefore the impugned order is no more than being based on mere surmise and conjecture. The jobs undertaken by the appellant were in connection with or in the category of or a part of the work undertaken by them in construction of the residential complex. It cannot be considered as a job separately for site levelling and slope protection work. The construction of the boundary wall security room and levelling of the premises is part and parcel of the work construction of residential complex at the sub-stations of Bihar Electricity Board. Conclusion - The services provided by the appellant were non-commercial and related to government infrastructure projects thus exempt from service tax. There are no merit in the order appealed being not in accordance with law - appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include: 1. Whether the services provided by M/s Chinki Construction Private Limited as a sub-contractor fall under the taxable category of "commercial and industrial services" and are thus liable for service tax. 2. Whether the appellant, as a sub-contractor, is exempt from paying service tax when the main contractor has already paid the tax. 3. Whether the services provided by the appellant are classified correctly under the Finance Act, 1994, and whether they qualify for exemptions based on the nature of the work (i.e., construction related to government infrastructure projects). 4. Whether the appellant's failure to register for service tax and file returns constitutes willful suppression of facts with the intent to evade tax. ISSUE-WISE DETAILED ANALYSIS 1. Taxability of Services Provided by Sub-Contractor - Relevant Legal Framework and Precedents: The Finance Act, 1994, defines various taxable services, including "commercial and industrial services" under sections 65(105)(zzzq), 65(30a), and 65(97a). The Board's Circular No.80/10/2004 and Circular No.147/16/2011 provide clarifications on taxability concerning government infrastructure projects. - Court's Interpretation and Reasoning: The Tribunal noted that the services provided were for constructing infrastructure for power stations and residential quarters for BSEB employees, which do not fall under commercial activities. The Tribunal referred to the Board's circulars clarifying that government infrastructure projects are non-commercial and thus not taxable. - Key Evidence and Findings: The appellant's work involved constructing boundary walls, security rooms, and residential quarters for BSEB, a government entity. The Tribunal found that these services were non-commercial and related to government functions. - Application of Law to Facts: The Tribunal applied the clarifications from the circulars to conclude that the appellant's services were non-commercial and exempt from service tax. - Treatment of Competing Arguments: The Tribunal rejected the Revenue's argument that the appellant's services were taxable, emphasizing the non-commercial nature of the work. - Conclusions: The Tribunal concluded that the appellant's services were not liable for service tax as they were non-commercial and related to government infrastructure projects. 2. Exemption for Sub-Contractors - Relevant Legal Framework and Precedents: Circular No.147/16/2011 clarifies that sub-contractors are exempt from service tax if the main contractor's services are exempt under works contract service. - Court's Interpretation and Reasoning: The Tribunal noted that the appellant, as a sub-contractor, was involved in works contract services for government infrastructure projects, which are exempt from service tax. - Key Evidence and Findings: Evidence showed that the appellant's work was part of a larger government project managed by PGCIL, with deductions for Works Contract Tax (WCT) indicating the nature of the contract. - Application of Law to Facts: The Tribunal applied the circular's exemption to the appellant's services, noting the non-commercial nature of the work and the role as a sub-contractor. - Treatment of Competing Arguments: The Tribunal dismissed the Revenue's contention that the appellant was independently liable for service tax, emphasizing the exemption for sub-contractors. - Conclusions: The Tribunal concluded that the appellant was exempt from service tax as a sub-contractor working on exempt government infrastructure projects. 3. Classification and Suppression of Facts - Relevant Legal Framework and Precedents: Sections 66, 67, 68, 69, and 70 of the Finance Act, 1994, and Rules 4, 5, 6, and 7 of the Service Tax Rules, 1994, govern service tax registration and filing requirements. - Court's Interpretation and Reasoning: The Tribunal found that the Revenue failed to classify the services correctly and did not establish willful suppression of facts by the appellant. - Key Evidence and Findings: The Tribunal noted that the appellant had not collected service tax from PGCIL and that the deductions were for WCT, not service tax. - Application of Law to Facts: The Tribunal applied the legal provisions to determine that the appellant was not liable for service tax and had not willfully suppressed facts. - Treatment of Competing Arguments: The Tribunal rejected the Revenue's argument of willful suppression, emphasizing the lack of evidence for such a claim. - Conclusions: The Tribunal concluded that the appellant had not willfully suppressed facts and was not liable for service tax due to incorrect classification by the Revenue. SIGNIFICANT HOLDINGS - The Tribunal held that the services provided by the appellant were non-commercial and related to government infrastructure projects, thus exempt from service tax. - The Tribunal emphasized that sub-contractors are exempt from service tax when working on exempt government infrastructure projects, as clarified in Circular No.147/16/2011. - The Tribunal found no evidence of willful suppression of facts by the appellant and criticized the Revenue for failing to classify the services correctly. - The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.
|
