Tribunal Upholds Rs. 16.00 Lakhs Demand for Quarters Construction, Rules Commercial Use

The Tribunal upheld the demand of approximately Rs. 16.00 Lakhs for the construction of quarters for personal use, stating that the exclusion clause did not apply as the appellant acted as a sub-contractor. The construction of a Daramshala was deemed commercial due to its use for various commercial activities. The building constructed by a commercial organization for staff welfare was considered commercial despite the appellant's argument otherwise. A pre-deposit of Rs. 10.00 Lakhs was ordered within 6 weeks, with remaining liability stayed pending appeal. Failure to comply would result in dismissal of the appeal.

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Issues:
1. Construction of quarters for personal use.
2. Construction of Daramshala for commercial purposes.
3. Construction of building for staff welfare by a commercial organization.

Analysis:
1. The appellant argued that the demand related to the construction of quarters for personal use of staff was not sustainable. However, it was found that the appellant acted as a sub-contractor engaged by a contractor, not directly by RSRDC. Therefore, the exclusion clause under Section 65(105)(zzzh) of the Finance Act, 1994 did not apply. The demand of approximately Rs. 16.00 Lakhs for this construction was upheld.

2. Regarding the construction of Daramshala, the appellant claimed it was not for commercial purposes. However, it was observed that the facility was used for various commercial activities, including marriages, and thus fell within the scope of Construction of Complex Services (CICS).

3. In the case of the building constructed by M/s. KHTPL for staff welfare, training center, canteen, etc., the appellant argued it was for non-commercial purposes. Despite the appellant's contention, it was noted that KHTPL is a commercial organization. The argument was made that the building was for business or commerce. The Tribunal found that the construction could be considered commercial due to the nature of the organization.

4. Considering the appellant's contention that the demand was time-barred, the Tribunal ordered a pre-deposit of Rs. 10.00 Lakhs within 6 weeks as per Section 35F of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994. Compliance was required by a specified date, failing which the appeal would be dismissed. The remaining liability was stayed pending the appeal upon the pre-deposit. Any amount already deposited towards the impugned order would be counted towards the pre-deposit.

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