Service tax classification of paver block laying at a port treated as commercial or industrial construction, not business auxiliary service.

Laying of paver blocks at a port was analysed for service tax classification and was treated as commercial or industrial construction service rather than business auxiliary service. The activity was held to relate to construction work at the port, falling within the statutory scope of construction and allied services connected with commerce or industry. It was not regarded as service provided on behalf of clients in the manner required for business auxiliary service. On that basis, the article states that the activity was not taxable as business auxiliary service, and the related demand, interest and penalties were unsustainable.

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Issues: Whether laying of paver blocks at a port was classifiable as business auxiliary service or as commercial or industrial construction service under the service tax law.

Analysis: The activity undertaken was laying of paver blocks at JNPT. The statutory definition of commercial or industrial construction service covered construction and allied services in relation to commerce or industry, while excluding services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. On the admitted facts, the work performed by the appellant was more appropriately covered by commercial or industrial construction service and not by business auxiliary service. The service was rendered in relation to construction activity at the port and could not be treated as provision of service on behalf of clients in the manner suggested by the Revenue.

Conclusion: The activity was not taxable as business auxiliary service and fell within commercial or industrial construction service. The demand, interest and penalties were unsustainable.

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