2017 (11) TMI 714 - AT - Service Tax

Tribunal sets aside service tax demand & penalty for non-commercial services

The Tribunal ruled in favor of the appellant, setting aside the service tax demand and penalty for services provided to non-commercial Government ... Levy of service tax - Management, Maintenance or Repair service - Cleaning services - Commercial and industrial construction service - Construction service provided to MAHAGENCO - Construction of residential complex - Held that: - the said service was provided to Government Medical College, Nagpur, Visvesvaraya National Institute of Technology, Nagpur and Central Railway. Since the service provided in relation to Government building which is not for commercial purpose the service of management, maintenance or repair of non-commercial Government buildings is exempted for the period from 16.6.2005 to 1.7.2012 in terms of Section 98 of the Finance Act, 1994 - From the reading of the above Section 98 of the Act, it can be seen that the management, maintenance or repair service of non-commercial Government building during the period 16.6.2005 to 1.7.2012 is exempted - demand set aside. Cleaning services - Held that: - it is observed that the cleaning service was provided by the appellant for the Government building i.e. Ravi Bhavan (Chief Minister Secretariat), Hyderabad House (Dy. Chief Minister Office) and cleaning of MLA Hostel rooms, hall and passage. Since all these buildings for which cleaning service was provided are of Government, therefore it is not taxable under cleaning service - demand set aside. Commercial and industrial construction service - Held that: - this service was provided in respect of guest house and canteen of Visvesvaraya National Institute of Technology, Nagpur which is an activity of non-commercial in nature. Therefore being a construction of non-commercial building will not fall under the category of commercial and industrial construction service, hence the same is not taxable - demand set aside. Construction service provided to MAHAGENCO - Held that: - in respect of construction of Podium, Wall Panel etc. for Maharashtra State Power Generation Company Limited (MAHAGENCO) this MAHAGENCO is a independent company which is engaged in generation of power which is a commercial activity therefore construction service provided to MAHAGENCO cannot be said to be a service of construction of non-commercial Government building, therefore in our view the construction service provided for MAHAGENCO is taxable - demand upheld. Construction of residential complex - Held that: - construction of residential complex of 14 flats was provided for company M/s. Karamchand Thapar & Brothers Ltd. for residence of Directors/Officers of the Company. Even though it is a residential building but it belongs to a company and the building is used in relation to overall business of the company. Therefore it cannot be said that it is non-commercial building, therefore the construction of residential complex for M/s. Karamchand Thapar & Brothers Ltd. is liable for service tax - demand upheld. Penalty - Held that: - majority of the demand have been set aside and the issue involved is of interpretation of law, a part of the demand was paid by the appellant along with interest - penalty set aside. Appeal allowed in part. Issues Involved:Value of service tax demand and penalty for various services.Analysis:1. The issue involved in the judgment was the value of the service tax demand and penalty for different services provided. The appellant contested the demand for Management, Maintenance, or Repair for non-commercial Government buildings, Cleaning Service, and Commercial and Industrial Construction Service.2. The appellant argued that services provided to non-commercial Government buildings, such as Government Medical College, Nagpur, were exempt from service tax under Section 98 of the Finance Act, 1994. The Tribunal agreed and set aside the demand of Rs. 21,95,371 for these services.3. Regarding the demand for Cleaning Service, the appellant provided cleaning services to various Government buildings like Ravi Bhavan and Hyderabad House, which are non-commercial Government buildings. The Tribunal found that these services were not taxable under the definition of cleaning activity and set aside the demand of Rs. 3,99,722.4. The demand for Commercial and Industrial Construction Service was contested by the appellant, stating that the construction activities were for non-commercial purposes. The Tribunal referred to previous judgments and held that construction for non-commercial buildings was not taxable. However, construction services provided to Maharashtra State Power Generation Company Limited and M/s. Karamchand Thapar & Brothers Ltd. were found taxable.5. The demand for Works Contract Service and Transport of Goods by Road Service was not contested by the appellant, and the Tribunal upheld these demands.6. Considering the interpretation of law and the partial payment made by the appellant, the Tribunal set aside the penalty imposed under Section 78 of the Finance Act, 1994. The appeal was partly allowed based on the above analysis.