Tribunal finds construction exempt under JNNURM based on CBEC circular, waives pre-deposit

The Tribunal ruled in favor of the appellant, finding that construction under JNNURM was likely exempt based on a CBEC circular. The inclusion of the value of goods in the assessable value was deemed incorrect. The Tribunal referenced a previous case to suggest that the construction of the stadium may not fall under the taxable category. The appellant's deposited amount was considered adequate, leading to a waiver of additional pre-deposit and a stay on the recovery of the disputed liability during the appeal process.

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Issues:
1. Service tax demand on "Commercial or Industrial Construction Service" (CICS) and "Construction of Complex Service" (CCS).
2. Exemption for "Construction of Residential Complex Service" under JNNURM and VAMBAY.
3. Inclusion of value of goods in assessable value.
4. Construction of stadium for Madhya Pradesh Cricket Association.
5. Exemption for services provided to units in special economic zones.
6. Construction of Awasi Vidyalaya for MP ALaghu Udyog Nigam.
7. Taxability of services rendered under works contracts.

Analysis:
1. The appellant challenged the service tax demand on the grounds that construction of houses under JNNURM should be exempt as per CBEC circular. The demand related to JNNURM works out to Rs. 55,48,045. The appellant argued that the value of goods used for construction should not be included in the assessable value. Additionally, the construction of the stadium for Madhya Pradesh Cricket Association was claimed not to qualify under CICS for commercial purposes, with a demand of Rs. 7,04,466. Services provided to units in special economic zones were asserted to be exempt under Notification No. 4/2004-ST, with a demand of Rs. 3,80,791. The construction of Awasi Vidyalaya for MP ALaghu Udyog Nigam and the taxability of services under works contracts were also disputed.

2. The Tribunal acknowledged the appellant's contentions, noting that a significant portion of the demand pertained to construction under JNNURM, which appeared prima facie exempt based on the CBEC circular. The Tribunal agreed with the appellant that the value of goods should not have been included in the assessable value. The taxability of other services required further examination. Referring to a precedent, the Tribunal cited the case of BG Shirke Construction vs CCE, Pune, where CESTAT granted a stay for construction of a sports stadium, indicating it may not fall under CICS. The appellant had already deposited Rs. 26,45,334 towards the service tax liability.

3. Considering the circumstances, the Tribunal found the deposited amount sufficient under section 35F of the Central Excise Act, 1944, and section 83 of the Finance Act, 1994. Therefore, the Tribunal waived the need for any additional pre-deposit and stayed the recovery of the remaining disputed liability during the appeal process.

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