2014 (12) TMI 1093 - AT - Service Tax

Tribunal rules construction for college not 'works contract service'

B. RAMA RAO & COMPANY Versus COMMR. OF CENTRAL EXCISE, HYDERABAD

The Tribunal ruled in favor of the appellant, stating that the construction activities for a Polytechnic College, including staff quarters, hostels, and ... Works Contract Service - commercial or industrial service - Held that:- Claim of the appellant that they have paid the entire tax liability in respect of ‘works contract service’ is required to be verified since there is a dispute on this issue. The liability of balance amount attributable to construction of staff quarters, students’ hostel etc. for Polytechnic College, we hold that the demand does not exist. Since there is a dispute regarding the payment of Service Tax claimed to have been made by the appellant, we consider it appropriate that matter has to be remanded to the original authority for the limited purpose of quantifying the correct amount and verifying the payment made by the appellant. In case of any discrepancy, the original authority shall intimate the same to the assessee for making payment. At this stage, learned counsel also undertakes that in case of any discrepancy, they would make payment of the same. As regards penalties, the appellant’s submission regarding non-liability or alternatively request to invoke Section 80 of Finance Act, 1994 may be considered by the original authority. - Matter remanded back - Decided in favour of assessee. Issues:1. Demand of Service Tax on the appellant for Works Contract Service.2. Interpretation of 'works contract service' in relation to construction of staff quarters, hostels, and fish tanks for a Polytechnic College.3. Verification of the appellant's claim of paying the entire tax liability for works contract service.4. Dispute regarding the payment of Service Tax and remand to the original authority for quantification.5. Consideration of penalties and invocation of Section 80 of the Finance Act, 1994.Analysis:1. The appellant was demanded Service Tax for Works Contract Service, which they contested. The appellant claimed to have paid the entire amount of Service Tax dues with interest, except for the balance demand related to construction activities for a Polytechnic College.2. The advocate argued that the construction undertaken by the appellant, such as staff quarters, hostels, and fish tanks, did not fall under the definition of 'works contract service' as it was not for commercial or industrial purposes. The Tribunal agreed, stating that the staff quarters were for renting out to college staff, not for sale, and the hostels were for students' use, not commercial purposes. The construction of fish tanks was also deemed outside the scope of 'commercial or industrial construction service.'3. The Tribunal decided that the appeal could be disposed of finally, waiving the requirement of pre-deposit for the balance dues. However, due to a dispute regarding the payment of Service Tax claimed to have been made by the appellant, the matter was remanded to the original authority for quantification and verification of payments.4. The Tribunal held that the demand for the balance amount attributable to construction activities for the Polytechnic College did not exist. The original authority was tasked with verifying the correct amount and the payments made by the appellant. Any discrepancies found were to be communicated to the appellant for payment, with penalties to be considered based on the appellant's submissions regarding liability or invoking Section 80 of the Finance Act, 1994.5. The stay application and the appeal were disposed of with the above decisions, emphasizing the need for verification of tax payments and consideration of penalties as per the appellant's submissions and relevant legal provisions.