2013 (12) TMI 47 - AT - Service Tax

Tribunal exempts educational building from service tax as not 'Commercial or Industrial Construction Service'

The Tribunal ruled in favor of the appellant, determining that the building constructed for training industrial workers did not fall under 'Commercial or ... Demand of service tax - Commercial or Industrial Construction Service - specific exclusion under Section 105(25b) of Finance Act, 1994 - Held that:- Prima facie, considering the Board's Circular and the type of approval given by the local authorities, we are of the view that this building cannot be considered to be a 'Commercial or Industrial Building'. Therefore, we grant waiver of pre-deposit of dues arising from the impugned order and stay collection of such dues till disposal of the appeal - Stay granted. Issues:1. Whether the construction of a building for training industrial workers falls under 'Commercial or Industrial Construction Service' for service tax purposes.2. Interpretation of the CBEC Circular No.80/10/2004-ST in determining the classification of a building.3. Assessment of the nexus between the building's purpose and industry for tax liability.Issue 1:The case involved a dispute regarding the applicability of service tax on a building constructed for training industrial workers. The applicant argued that the building's purpose did not fall under 'Commercial or Industrial Construction Service' due to a specific exclusion under Section 105(25b) of the Finance Act, 1994. The Revenue contended that the activity did amount to such a service, leading to a demand for unpaid service tax. The original authority relied on CBEC Circular No.80/10/2004-ST to decide whether the building was for educational, religious, or charitable purposes. The Commissioner (Appeals) upheld the demand, prompting the appellant to file an appeal.Issue 2:The interpretation of the CBEC Circular was crucial in determining the classification of the building. The circular provided guidelines, including considering the classification given by local authorities at the time of approving the building plan. The appellant argued that since the local authorities approved the building in the educational zone as a training center, it should not be considered a 'Commercial or Industrial Building' for tax purposes. The Revenue countered by highlighting that fees were charged for training industrial workers, indicating a close nexus with the industry.Issue 3:The nexus between the building's purpose and industry was a key factor in assessing tax liability. The appellant emphasized the educational nature of the building, while the Revenue pointed out that charges were levied for training services and infrastructure maintenance. The Tribunal, after considering arguments from both sides and the Board's Circular, concluded that the building could not be classified as a 'Commercial or Industrial Building.' Consequently, the Tribunal granted a waiver of pre-deposit of dues and stayed the collection of such dues pending the appeal's disposal.