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TMI Blog2025 (3) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... s are clearly engaged in commercial activities. It is also found that the other arguments taken by the learned Advocate is that their work is not for commercial use, per se, and therefore, they would be covered within the ambit of S.No. 12(a). This argument is also not correct, inasmuch as the exemption notification has to be construed strictly in terms of the wordings of the notification and a plain reading would obviously indicate that if the service was for use for commercial purpose then it would not get covered. In this case, it is obvious that all these activities are for value addition of the plot and township, which are being sold at commercial rates and terms by these two authorities, therefore, these services are obviously provided to the authorities, who are otherwise engaged in commerce. In view of the same, there are no infirmity in the impugned order in denying them the benefit under S.No. 12(a) of the notification 25/2012-ST. Whether S.No. 12(e) covers the excluded category, which has been left out by the Commissioner or otherwise while extending the benefit under S.No. 12(e) to RDA? - HELD THAT:- While the learned Advocate has contested that all these activities ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case, limitation has been rightly invoked or otherwise and whether penalty has been rightly imposed? - HELD THAT:- There was no substantive and positive grounds for alleging that there was deliberate and willful misstatement or suppression by the appellant to evade service tax in the facts of the case and therefore, the invocation of extended period of limitation in terms of proviso to section 73(1) is not sustainable. Accordingly, the decision of the Adjudicating Authority in the impugned order to the extent upholding the invocation of extended period is liable to be set aside and is accordingly, set aside. Further, since the extended period is not invocable, the penalty imposed is also not tenable and accordingly, the same is also set aside. Conclusion - i) The denial of exemption under S.No. 12(a) due to the commercial nature of the services provided to RDA and NRDA upheld. ii) The appellants were not eligible for exemption under S.No. 39 as they were not a governmental authority. iii) Since the extended period is not invocable, the penalty imposed is also not tenable and accordingly, the same is also set aside. Appeals are allowed by way of remand to the Original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship projects were commercial in nature and therefore, they would not be eligible for exemption under S.No. 12(a) of Notification No. 25/2012-ST dt.20.06.2012. It was also alleged that apart from this, these two authorities are not Governmental Authorities. In the course of adjudication, the Adjudicating Authority examined various entries under notification 25/2012 to examine whether, in the facts of the case, the appellants were entitled for the said exemption and thereafter, allowed certain relief in respect of certain work while confirming the demand in respect of remaining amount. In brief, the Adjudicating Authority has held that both RDA & NRDA are Governmental Authorities and that the work is in the nature of Works Contract Service (WCS) and are covered within the scope of 'original work'. While the benefit under S.No. 12(a) has been denied on the grounds that these services were for commercial projects, the eligibility under S.No. 12(e) was also examined and allowed in respect of all the activities undertaken for infrastructure development for RDA, barring certain exclusions. However, while, in principle, agreeing with the eligibility under S.No. 12(e), the similar benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of RDA in respect of certain categories of work being not eligible within the scope of said entry, whereas, the entire demand has been confirmed in respect of NRDA despite agreeing in principle with the eligibility. Further, by way of alternative argument, he has also submitted that they are clearly entitled for exemption under S.No. 39 of the said notification. Essentially, learned Advocate has submitted that the activities performed by them were not put to commercial use as such and it was only used for developing a project, a part of which might have been used on commercial terms. Therefore, as far as the eligibility of exemption is concerned, they are very much covered within the purview of S.No. 12(a) of the said notification. Notwithstanding this fact, they are also eligible under S.No. 12(e) as well as under S.No. 39 of the said notification. 7. Further, learned Advocate has also, at length, explained the grounds as to why extended period of limitation cannot be invoked in the facts of the case nor penalty can be imposed. Learned Advocate points out that they were initially under the impression that they were covered under S.No.12(a) and it was only later during 01.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the appellants were provider of WCS to RDA/NRDA, who were the recipient of the said services. Therefore, what is material is the use to which the recipients have put these services and such services were clearly commercial in nature. He further submits that Commissioner has taken a stand that in the facts of the case, the extended period is invokable. Learned AR informs that investigation started even before they had filed refund claim. Therefore, it was a standalone investigation and only during the investigation, various details came to the light concerning commercial nature of activity of the recipient of service viz., RDA & NRDA. Therefore, it was felt that they were not entitled to S.No.12(a). In view of the same, extended period is rightly invoked and penalty has been rightly imposed. He has also relied on certain case laws in support. Learned Special Counsel has also reiterated case laws relied upon by the Adjudicating Authority for coming to the conclusion that extended period of limitation was rightly invocable and penalty was also rightly imposed. 9. Heard both sides and perused the records. 10. We intend to take up Appeal No. ST/30787/2018 first. In order to decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities and that the work involved is 'original work', which is not disputed by the Revenue also. On the other hand, learned Advocate is primarily trying to argue that these two agencies are predominantly noncommercial, whereas, relying on the terms of the contract and other relevant details, the Adjudicating Authority felt that the services provided were not meant predominantly for non-commercial purpose. The Adjudicating Authority, after taking into account various evidence brought by the department in support that these two agencies were engaged in commercial activity, came to the conclusion that if the service recipient intended to utilize the civil structure constructed by the service provider for commerce or industry, it would render service provider liable to pay service tax. He has brought out his findings in this regard at Para 37.3 and 37.4 of the impugned order, which is reproduced for ease of reference. 37.3 It is not disputed by the assessees that these contracted works fall under Works Contract Services and since all the agreements entered into with NRDA are after 01.07.2012, they are taxable services in view of provisions of Sec 66E of Finance Act, 1994 which de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely in public interest and was undertaken as mandatory and statutory function. Whereas in the instant case, the Raipur Development Authority have engaged the assessees to develop the road, road crossing, etc with the purpose of selling the fully constructed residential units situated in the project developed. NRDA, having been constituted by the Government of Chattisgarh to develop residential colonies in the State of Chattisgarh by acquiring land and taking up construction activities to develop such land to suitable residential units of plots ranging from 2000 sqft to 3000 sqft which were intended for sale to individuals desirous of constructing residential units. As part of preparing the plots for sale certain infrastructural facilities like roads, water, drainage, street light, etc., were to be developed by NRDA to facilitate sale of the plots/residential units. Such works were assigned to the assessee for execution. Aforesaid website pictures of NRDA clearly evidences that services, thus, rendered by the assessee to NRDA were not meant for performance of any statutory function but for business and commerce. Screenshots taken from the website of NRDA clearly provide that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has considered certain activities as covered within the ambit of notification but has not allowed the same benefit in respect of reservoirs and sumps meant for water storage, in view of the fact that water storage, as such, cannot be covered within the ambit of Entry No. 12(e). Therefore, to that extent, the benefit of the notification was not extended. While the learned Advocate has contested that all these activities are civic in nature and therefore, they should be covered under the notification and that the wordings under S.No. 12(e) of the Notification clearly covers even the activities of work relating to reservoirs, sumps and pumping stations, we find that the notification only covers three activities viz., pipeline, conduit or plant for (a) water supply, (b) water treatment, (c) sewerage treatment or disposal. Therefore, a plain reading of the entry would indicate that reservoirs and sumps would not be covered on the plain reading. However, we feel that since the expression used is 'plant', this would include pumping stations. Further, a plant for either water supply or water treatment or sewerage treatment or disposal would invariably also have certain reservoirs or sumps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) of the notification. We note that there is clear breakup in case of activities provided to RDA, which helped in taking decision as to what services were covered or otherwise within the ambit of S.No. 12(e). However, similar breakups were not provided in case of NRDA, though it is apparent that on a broader level, they are almost similar to the activities as that of RDA. Therefore, we feel that in this regard the matter needs to be remanded back to the Original Adjudicating Authority to reexamine the eligibility under S.No. 12(e) in respect of WCS provided to NRDA on the similar lines as that of RDA and also keeping in view, our observations as regards exclusions i.e., reservoirs, sumps and pumping stations. (d) Whether, in the facts of the case, limitation has been rightly invoked or otherwise and whether penalty has been rightly imposed:- 19. The appellants have strongly contested the invocation of extended period and imposition of penalty. The Adjudicating Authority has mainly considered that the case has been made out based on the intelligence and all the relevant information was provided only subsequent to summons issued by the department. Based on the said information, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is obvious that the two allegations, viz., that RDA/NRDA were not governmental authorities and they were not providing 'original work' etc., were later on not found tenable by the Adjudicating Authority and this has not been further disputed by the department. Therefore, their holding the view that they were providing the services to the governmental authority was correct. As regards whether the governmental authorities were engaged in commercial or non-commercial activities, the appellants were only dealing with limited aspect of the project and not in terms of what the service recipients were engaged in. Therefore, though it was held that they would not be eligible for exemption, it would be obvious that there was ample scope for their having bonafide belief and different views on the eligibility or otherwise under the said entry. Similarly, in respect of Entry No. 12(e), though it was not initially claimed, later on the Adjudicating Authority accepted that most of their activities would be covered within this entry and accordingly, substantive relief was allowed. This aspect has also not been disputed by the Revenue. In fact, even for the exclusion category, there is still so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to decide the refund, in view of the decision to be taken by the Original Authority in the denovo proceedings as it would have bearing on the quantum of refund admissible. Therefore, these appeals are also liable to be remanded back to the Original Refund Sanctioning Authority for redetermination of quantum of refund admissible to them in terms of their eligibility under S.No. 12(e) of the notification 25/2012-ST and subject to provisions under the Act and Rules.
23. Therefore, we do not find any infirmity in the impugned order except to the extent of denial of benefit under S.No. 12(e) of the notification 25/2012-ST, exclusion of category in respect of activities provided to RDA and for the entire contract of NRDA, as also invocation of extended period and imposition of penalty and to that extent impugned order is upheld.
24. Accordingly, Appeal No. ST/30787/2018 is partly allowed by way of remand to the Original Adjudicating Authority.
25. The remaining four appeals i.e., Appeal Nos. ST/30622/2018, ST/30026/2021, ST/30306/2021 & ST/30312/2021 are allowed by way of remand to the Original Sanctioning Authority.
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