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<h1>Tribunal Waives Service Tax for Government Projects, Grants Penalty Relief</h1> The Tribunal granted the applicants' request for waiver of pre-deposit of Service Tax amount and penalties under Section 76 and other penalties under the ... Construction of residential complex for Army and West Bengal Power Devp. Corpn.- Service tax demand - Held that:- Board vide Circular No. 332/16/2010-TRU Dated 24/5/2010 and as decided in KHURANA ENGINEERING LTD. Versus COMMR. OF C. EX., AHMEDABAD [2010 (11) TMI 81 (Tri)]that service provided to Govt. of India directly for end use of residential complex by Govt. of India discovered by the definition of personal use and therefore no Service Tax is leviable on them - as the applicant is engaged in the construction of flats for Indian Army and WBPDCL and the residential complex are for the personal use of the army and WBPDCL - in favour of assessee. Issues:Waiver of pre-deposit of Service Tax amount and penalties under Section 76 and other penalties under the Finance Act, 1994.Analysis:The applicants sought waiver of pre-deposit of Service Tax amounting to Rs.28,88,466/- and 53,80,677/- along with penalties under Section 76 and other penalties under the Finance Act, 1994. They are involved in constructing residential quarters for the Indian Army and a West Bengal government undertaking. The contention was that as per a Board circular and a Tribunal decision, if the service is directly provided to the government for its personal use, then no Service Tax is leviable. The applicants argued that they are the sole contractors for the projects, not subcontractors. The Tribunal cited the case of Khurana Engg. Ltd. Vs. Commr. of C. Ex., Ahmedabad, where it was held that service provided directly to the government for end use of residential complex falls under the definition of personal use, exempting it from Service Tax.The Additional Commissioner reiterated the findings of the Commissioner (Appeals) regarding the nature of the projects. It was undisputed that the residential complexes were for the personal use of the Indian Army and the West Bengal government undertaking. A Board clarification from May 24, 2010, emphasized that if services are provided directly to the government for its personal use, Service Tax is not leviable. The Tribunal also referred to the Khurana Engg. Ltd. case, where it was held that services provided directly to the government for personal use are exempt from Service Tax. Considering these precedents and the nature of the projects, the Tribunal found that the applicants had a prima facie case in their favor. Therefore, the pre-deposit of Service Tax was waived, and recovery thereof was stayed during the appeal process. Stay petitions were allowed, and the impugned order was set aside, granting consequential relief to the applicants.
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