2013 (7) TMI 268 - AT - Service Tax

Construction services not taxable as site services, waiver granted, recovery stayed during appeal.

The appellant, M/s. Gammon India Ltd., successfully argued that their construction work for the Sabarmati River Front Corporation Ltd. did not fall under ... Construction Activities - site formation and clearance, excavation and earthmoving and demolition services' - Section 65 (97a) – construction of diaphragm wall and anchor slab with special fill from Dudheswar to Gandhi Bridge (eastern bank of river Sabarmati) - Held that:- The activity relates to construction services and the object of the project is to develop water bodies and recharge water sources - the construction services excludes construction relating to road, airport, railways, transport, tunnels, dams – construction relates to the excluded variety – as decided in ITD Cementation India Ltd. vs. CST (2010 (12) TMI 804 - CESTAT, MUMBAI) - Prima facie case is in favor of assessee - stay granted. Issues:1. Whether the activity undertaken by the appellant falls under 'site formation and clearance, excavation and earthmoving and demolition services' as per Section 65 (97a) of the Finance Act, 1994.2. Whether service tax is leviable on the construction services provided by the appellant.3. Grant of stay application against the order-in-original demanding service tax, interest, and penalties.Issue 1:The appellant, M/s. Gammon India Ltd., undertook construction work for the Sabarmati River Front Corporation Ltd. The department alleged that the activity fell under 'site formation and clearance, excavation and earthmoving and demolition services' as per Section 65 (97a) of the Finance Act, 1994. The appellant argued that the work awarded to them was for civil construction related to the construction of diaphragm wall and anchor slab with special fill on the riverbank, which was excluded from the scope of the services mentioned in the show-cause notice. They cited a letter from the Municipal Commissioner clarifying the nature of the work. The Tribunal agreed with the appellant, noting that the project aimed at developing water bodies and recharging water sources, which did not fall under the mentioned services. The Tribunal granted an unconditional waiver from pre-deposit of dues and stayed the recovery during the appeal.Issue 2:The appellant contended that the construction services provided by them did not attract service tax as they were related to excluded categories such as construction of roads, tunnels, and dams. The appellant argued that since their construction work was not related to the services mentioned under Section 65 (25b), service tax should not be levied. The Tribunal agreed with the appellant's submission, finding that the construction activities undertaken by the appellant fell within the excluded category. Consequently, the Tribunal granted a stay on the recovery of service tax during the appeal process.Issue 3:The appellant sought a stay against the order-in-original demanding service tax, interest, and penalties. The Revenue argued that the appellant's activity fell under land reclamation services as defined in Section 65 (97a) and should not be granted a stay. However, the Tribunal, after considering the submissions and documents, found in favor of the appellant. The Tribunal concluded that the appellant had a strong case for grant of stay, and hence, granted an unconditional waiver from pre-deposit of dues and stayed the recovery of the amount demanded during the pendency of the appeal.This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's decision on each issue, ensuring a comprehensive understanding of the legal aspects and reasoning behind the judgment.