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of <h1>Tribunal Rules in Favor of Assessees in Tax Dispute</h1> <h3>C.C.E. & S.T. – Rajkot Versus Shanti Construction co., Standard Buildcon (Vice-Versa)</h3> C.C.E. & S.T. – Rajkot Versus Shanti Construction co., Standard Buildcon (Vice-Versa) - TMI Issues:- Demand of service tax on civil construction services- Imposition of penalties under sections 76, 77, and 78- Appeal challenging confirmation of service tax demand and penalties- Appeal regarding reduction of penalty under section 78 and demand on road construction and residential quarterAnalysis:The case involved assessees engaged in civil construction services who did not register or pay service tax, leading to proceedings and imposition of penalties under sections 76, 77, and 78. The Commissioner (A) upheld the service tax demand and penalty under section 78 but set aside penalties under sections 76 and 77. The assessees and the Revenue both filed appeals, with the assessees contesting penalties and specific construction services being taxed. The assessees argued a bonafide belief based on advice from Indian Oil Corporation Ltd. (IOCL) regarding taxable construction. The Tribunal found the assessees' belief reasonable, invoking section 80 to waive penalties under sections 76, 77, and 78. Regarding the Revenue's appeal, the Tribunal determined that road construction and residential quarters for a government agency were not taxable under commercial or industrial construction services, upholding the dropping of demand in these cases.The Tribunal considered the assessees' argument regarding the bonafide belief in non-taxable construction services based on advice from IOCL. The assessees maintained proper records and did not suppress information, leading the Tribunal to waive penalties under sections 76, 77, and 78 using section 80. The Tribunal also analyzed the Revenue's appeal, concluding that road construction and residential quarters for a government agency did not fall under taxable commercial or industrial construction services. Therefore, the demand for service tax in these instances was rightly dropped by the Commissioner (A).In conclusion, the Tribunal set aside the penalty under section 78 and upheld the dropping of penalties under sections 76 and 77. The assessees' appeals were partly allowed, while the Revenue's appeals were dismissed. The judgment was pronounced on 25/07/2018 by the Tribunal.
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