Construction company liable for service tax on soil levelling activities, exemption denied, extended limitation period applied.

NKG Infrastructure Limited Versus Commissioner of Customs, Central Excise And Service Tax

NKG Infrastructure Limited Versus Commissioner of Customs, Central Excise And Service Tax - 2017 (47) S.T.R. 113 (All.) Issues:
1. Whether extended period of limitation is applicable for the Show Cause Notice demanding service tax on a bill dated 18.08.2006Rs.
2. Whether activities of 'agriculture land leveling' undertaken by the Appellant are covered under specific clauses of the Finance Act, 1994Rs.

Issue 1: Extended Period of Limitation for Service Tax Notice
The appellant, a construction company, received a work order from another company for levelling soil and related activities. The appellant did not pay service tax on this work and did not disclose it in their returns. The Revenue initiated an assessment process after obtaining information from various sources. The appellant claimed exemption under a specific section of the Finance Act, 1994. However, the Revenue found the appellant liable for service tax, interest, and penalties. The Tribunal upheld this decision. The High Court noted that the appellant suppressed facts regarding the work done, justifying the application of the extended period of limitation. Therefore, the first issue was decided against the appellant, upholding the Revenue's actions.

Issue 2: Applicability of Exemption for Agriculture Land Leveling
The appellant argued for exemption from service tax based on specific clauses of the Finance Act, 1994, related to site formation and clearance activities. The High Court analyzed the definitions provided in the Act and concluded that the work undertaken by the appellant, which involved levelling soil for a residential development project, did not fall under the excluded categories of agriculture or irrigation. The Court emphasized that the work was not related to simple agricultural activities but was part of a larger development project. Therefore, the Court held that the appellant was not exempt from service tax as claimed. Consequently, the second issue was decided against the appellant, affirming the Revenue's assessment. The appeal was dismissed based on these findings.

In conclusion, the High Court upheld the Revenue's assessment of service tax liability on the appellant for the work done, rejecting the appellant's claims for exemption and extended period of limitation.