Service tax on hospital construction failed where no evidence showed commercial or profit-making use under the Board's circular.

Service tax was not leviable on construction of a hospital building where the record showed charitable and public utility use rather than commercial or profit-making use. The Board's circular made taxability depend on whether the building was used or intended to be used for commerce, industry, or profit, and departmental officers were bound by that clarification. Because the revenue did not conduct a meaningful enquiry or produce evidence of commercial use, and the adjudicating authority did not address that burden, the demand was unsustainable.

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Issues: Whether service tax was leviable on construction of a hospital building claimed to be for charitable and public utility purposes under the classification of commercial or industrial construction service.

Analysis: The circular issued by the Board stated that taxability depended on whether the building or civil structure was used or to be used for commerce, industry, or profit-making purposes. Departmental officers were bound by this clarification. The record showed that the appellant had raised the plea that the hospital was meant for charitable use, while the revenue had not undertaken any meaningful enquiry to establish that the building was being used for profit-making or commercial purposes. The adjudicating authority also did not address the burden on the revenue under the circular. In the absence of evidence showing commercial use, the demand could not be sustained.

Conclusion: Service tax was not leviable on the impugned construction activity, and the demand was unsustainable.

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