2015 (1) TMI 1191 - AT - Service Tax

Tribunal rules laying paver blocks at port as 'commercial construction service'

The Tribunal ruled in favor of the appellant, finding that laying paver blocks at a port constituted 'commercial or industrial construction service' ... Business auxiliary service - appellant is undertaking the assigned job on behalf of their clients through contractors - Held that:- Admitted facts of the case are that the appellant had undertaken the job of laying of paver blocks at JNPT. In the impugned order in para 35, the adjudicating authority also held that prima facie there is force in the claim of the appellant as they claim to be carrying out the work of constructing the structure at port by using paver block only and that they are only laying paver blocks at roads, commercial premises etc. hence the service is classifiable under commercial or industrial construction. As per the provisions of the above Section, we find that the activity undertaken by the appellant, i.e. laying of paver blocks, more appropriately comes under the scope of ‘commercial or industrial construction service’ and the industrial construction service does not include any service provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. As commercial and construction activity is undertaken by the appellant at the port, therefore we find merit in the contention of the appellant that the activity undertaken by the appellant does not fall under the business auxiliary service. The impugned order is set aside - Decided in favour of assessee. Issues:1. Whether the appellant is liable to pay Service Tax under business auxiliary service for laying paver blocks at a port.2. Whether the activity undertaken by the appellant falls under 'commercial or industrial construction service' as per Section 65(25b) of the Finance Act.Analysis:Issue 1: The appellant contested a demand confirming a Service Tax liability of Rs. 2,59,59,389/-, imposed for providing business auxiliary service. The appellant was engaged by contractors for laying paver blocks at a port, leading to a show cause notice alleging Service Tax liability. The adjudicating authority upheld the demand, citing the appellant's provision of service on behalf of clients through contractors. The appellant argued that their work constituted 'commercial construction service' under Section 65(25b) of the Finance Act, referencing a Tribunal decision in a similar context.Issue 2: The Revenue contended that the appellant's activity, facilitated by contractors, amounted to business auxiliary service due to service provision on behalf of clients. However, the adjudicating authority acknowledged the appellant's claim of engaging in commercial or industrial construction, specifically noting the use of paver blocks for construction at the port. The relevant provisions of Section 65(25b) were examined, defining 'commercial or industrial construction service' to include various construction activities but excluding services related to roads, airports, railways, etc. The Tribunal found that the appellant's work of laying paver blocks at the port aligned more with 'commercial or industrial construction service' rather than business auxiliary service, ultimately setting aside the impugned order and allowing the appeal.In conclusion, the Tribunal ruled in favor of the appellant, determining that the activity of laying paver blocks at the port constituted 'commercial or industrial construction service' rather than business auxiliary service. The judgment highlighted the specific provisions of Section 65(25b) of the Finance Act to support this finding, ultimately overturning the demand for Service Tax and penalties imposed on the appellant.