Commercial construction tax does not apply to statutory market bodies or railway-premises warehouses in this construction dispute.

Construction undertaken for APMC was treated as non-commercial because APMC is a statutory body serving farmers and market users, and the cited circulars stated that services funded from market fee and constructions for charitable-type organisations are outside Commercial and Industrial Construction Service; the work was therefore held not taxable. Construction of warehouses for CWC within railway premises was also held outside the taxable net because the term railway was read broadly to cover warehouses within the railway system, and their location and statutory character brought the activity within railway-related construction. On both issues, the service tax demand was found unsustainable.

---

---

Issues: (i) Whether construction activity undertaken for APMC was liable to service tax under Commercial and Industrial Construction Service; (ii) whether construction of warehouses for CWC situated within railway premises fell within the taxable category or was excluded as railway-related construction.

Issue (i): Whether construction activity undertaken for APMC was liable to service tax under Commercial and Industrial Construction Service.

Analysis: The construction activity for APMC was examined in the light of the nature and functions of APMC as a statutory body constituted for the benefit of farmers and users of the market. The relevant circulars clarified that services provided by APMC out of market fee are not in the nature of commercial outsourced services and that constructions undertaken for organizations established for charitable purposes are not taxable as commercial constructions. The contracts were therefore treated as non-commercial in nature.

Conclusion: The construction activity undertaken for APMC was not taxable under Commercial and Industrial Construction Service.

Issue (ii): Whether construction of warehouses for CWC situated within railway premises fell within the taxable category or was excluded as railway-related construction.

Analysis: The definition of railway was read broadly to include warehouses within the railway system. Since the warehouses were located in railway premises and were covered by the statutory understanding of railway, the activity was held not to fall within the scope of Commercial and Industrial Construction Service. The location and statutory character of the warehouses removed the construction from the taxable net.

Conclusion: The construction of warehouses for CWC situated within railway premises was not taxable under Commercial and Industrial Construction Service.

Final Conclusion: The demand of service tax on both sets of construction contracts was unsustainable, and the assessee succeeded on all material issues.

---