2021 (8) TMI 1114 - AT - Service Tax

Appeal allowed: Construction services to Mandi Samiti not taxable. Revenue's appeal dismissed as time-barred.

The Tribunal allowed the appeal filed by the assessee, confirming that construction services provided to Mandi Samiti are not taxable. The Tribunal also ... Levy of service tax - services provided to Mandi Samiti for construction services in the market yard - commercial in nature - demand of penalty - HELD THAT:- Undisputedly the appellant have rendered construction service to the Mandi Samiti, which is a statuary authority. The services provided to Mandi Samiti for construction services in the market yard are not commercial in nature as held by a coordinated Bench of this Tribunal in M/S. KRISHI UPAJ MANDI SAMITI AND OTHERS VERSUS CCE & ST, JAIPUR I & JAIPUR II [2017 (5) TMI 1465 - CESTAT NEW DELHI] wherein it is held herein with the introduction of Negative List Regime of Taxation w.e.f. from 1st July, 2012, the Mandi Parishad is excluded from tax liability. This Tribunal held that Mandi Samiti or Board are not liable to Service Tax on renting of immovable property used for storage of agricultural produce in the market area. Time Limitation - penalty - HELD THAT:- The Impugned Order is not sustainable and was set-aside. It was further held that the post-harvest strategy of storage marketing etc. being done by the Mandi Samiti is exempted under serial no. 14 of Notification No. 12/2012-ST. Appeal allowed. Issues Involved:1. Whether Service tax is rightly demanded under the head 'work contract services' for construction activities carried out for Rajya Krishi Utpadan Mandi Parishad.2. Whether the services provided are covered by Sl. No. 12 & 13 of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012.3. Whether the demand for the period 2015-2016 is time-barred.Issue-wise Detailed Analysis:1. Service Tax Demand under Work Contract Services:The core issue in both appeals is whether the service tax is rightly demanded under the head 'work contract services' for various construction activities carried out for Rajya Krishi Utpadan Mandi Parishad, a statutory authority under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam 1964. The Revenue contended that the appellant's construction activities for Mandi Parishad are commercial in nature and thus taxable. However, it was established that the construction done for Mandi Samiti does not come under commercial activity, as supported by multiple judgments, including those of the Hon'ble High Court of Patna and CESTAT Mumbai.2. Applicability of Mega Exemption Notification No. 25/2012-ST:The appellant argued that their services are exempt under Sl. No. 12 & 13 of Mega Exemption Notification No. 25/2012-ST. The relevant clauses exempt services provided to government or governmental authorities for non-commercial use. The Tribunal confirmed that the services provided to the Mandi Samiti, being a statutory authority, are not commercial in nature. Additionally, the Tribunal noted that the construction services fall under Sl. No. 14(d) of the Mega Exemption Notification, which includes post-harvest storage infrastructure for agricultural produce.3. Time-barred Demand for the Period 2015-2016:For the subsequent period 2015-2016, the Tribunal examined whether the demand was time-barred. The Commissioner (Appeals) had set aside the demand on the grounds of limitation, noting that the demand for the period was clearly time-barred. The Tribunal upheld this finding, referencing the post-harvest strategy of storage marketing by the Mandi Samiti being exempt under serial no. 14 of Notification No. 12/2012-ST.Conclusion:The Tribunal allowed the appeal filed by the assessee (Service Tax Appeal No. 70073 of 2017) with consequential benefits, confirming that the construction services provided to Mandi Samiti are not taxable under the given circumstances. Additionally, the Tribunal dismissed the Revenue's appeal (Service Tax Appeal No. 70729 of 2019), reaffirming that the demand for the period 2015-2016 was time-barred and that the services provided were exempt under the relevant notification.Judgment Pronouncement:The judgment was dictated and pronounced in court on 19-08-2021.