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TMI Blog2016 (8) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The issue raised in all the petitions is identical as the petitioners are aggrieved against the action of Haryana Housing Board (for short, 'the Board'), whereby service tax which, according to the Board, was payable in its hands, is sought to be deducted from the bills of the petitioners. 4. Learned counsel for the petitioner submitted that the petitioner is a firm carrying on the business as a contractor. It was awarded contract for construction of flats for BPL category vide letter dated 26.8.2013. The contract is nearing completion. As per the provisions of Finance Act, 1994 and notification No. 25/2012- S.T. dated 20.6.2012 issued by the Government, the service of construction etc. provided to the Government, a local authority or a governmental authority is exempted from payment of service tax. The words "governmental authority" have been defined in the same notification, which was clarified later on vide notification No. 2/2014- S.T. Dated 30.1.2014. The term "original works" has also been defined in notification dated 20.6.2012. It was further submitted that the Board has been created under Haryana Housing Board Act, 1971 (for short, 'the Act'). It is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, however, in some cases there is some small period, which is prior thereto, for which the petitioners have already paid the due tax or are availing of their appropriate remedy. The dispute in the present bunch of petitions is only for the period from 1.7.2012 onwards. Ever since the contract was entered into and the work was being executed by the petitioner, neither the department ever issued any notice to the petitioner nor the Board ever asked for deposit of service tax. The petitioner was aggrieved against the action of the Board in deducting the entire amount of service tax even due for the previous period from the running bills. The grievance is that the petitioner being not liable to pay the tax, the action of the Board in deducting the same from the bills of the petitioner was totally un-called for. Further, it was submitted that in the case of contractors, the liability to pay the service tax is 50:50 on the service provider and the recipient. Even if the clause in the contract is seen, the petitioner would be liable to pay the service tax of his own share, whereas the liability, if any, of the Board cannot be passed on to the petitioner. 8. On the other hand, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book. 11. The following issues arise for consideration by this court in the present petition: (i) Whether service tax is chargeable on construction of BPL houses constructed by the petitioners for the Board ? (ii) Whether in terms of condition No. 3 in the tender conditions, the petitioners would be liable to discharge the liability of service tax, if payable, by the Board as per the provisions of the Finance Act, 1994, the Rules and the notifications issued thereunder? Issue No. (i) 12. Section 93 of the Finance Act, 1994, which enables the Government to grant exemption from payment of tax is extracted below: "93. Power to grant exemption from service tax (1) If the Central Government is satisfied that it is necessary in public interest so to do, it may, by notification in the Official Gazette, exempt generally or subject to such conditions as may be specified in the notification, taxable service of any specified description from the whole or any part of the service tax leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, if may, be special order in each case, exempt any taxable service of any specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide GSR 467 (E), dated the 20th June, 2012, namely:- In the said notification, in the paragraph 2, for clause(s), the following shall be substituted, namely:- (s) "governmental authority" means an authority or a board or any other body; (ii) set up by an Act of Parliament or a State Legislature; or (iii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; xx xx xx Notification: 6/2015-S. T. dated 01-Mar-2015 Exemption from Service Tax- Mega Notification exempting 39 group of services-Amendment to Notification No. 25/2012-S.T. In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act; under a contract which had been entered into prior to the Ist March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date: provided that nothing contained in this entry shall apply on or after the Ist April, 2020. [Emphasis supplied] xx xx xx" 14. The Board has been constituted in terms of the provisions of Section 3 of the Act, as was enacted by the State Legislature. It is a body corporate which consists of a Chairman, a Chief Administrator and such other members, as the State Government may, from time to time, appoint by a notification. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts the taxable services as enumerated in the notification from the whole of the service tax leviable thereon. If clause 12 of the notification dated 20.6.2012 is analysed, exemption from taxation to the services is provided to : (i) Government, a local authority or a governmental authority; (ii) the kind of service being construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of- (iii) it is meant predominantly for use other than for commerce, industry, or any other business or profession. 18. "Original works" has been defined in clause 2(y) of the notification dated 20.6.2012 to mean the meaning as assigned to in Rule 2A of the Service Tax (Determination of Value) Rules, 2000. 19. On a plain reading of the notification dated 20.6.2012, in our view, the service being provided by the petitioners would clearly fall in the exemption clause, as the Board is a governmental authority having been set up under a State Act, i.e., Haryana Housing Board Act, 1971. It is wholly controlled by the State Government. BPL houses constructed by the petitioners are meant for residential purpose and not for commerce, industry or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard had deducted the amount of tax, which is to be paid by the Board, in case the tax is leviable, which was totally uncalled for. A perusal of the aforesaid clause shows that the contractor is liable to pay various taxes, as mentioned in the clause, directly to the department in accordance with the Rules and the Regulations in force from time to time. The case of neither of the parties is that the liability, which may be put on the contractor/service provider, if tax is leviable, is being passed on to the Board, as the scheme of the Act provides for levy of tax 50:50 on service provider and the service recipient. Hence, the action of the Board, even if it is assumed that tax is leviable, to pass on their share of burden as per the provisions of the Act on the contractors is not envisaged in the clause. 24. Mere assessment framed by the department in the case of the Board will not detain this court from opining on the legal issue raised by the petitioners in the writ petitions, as the petitioners are aggrieved of the act of the Board in deducting the tax from their bills. 25. In view of our abovesaid discussion, the questions, as framed above, are answered as under: (i) On the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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