Tribunal Rules Construction Services for Public Welfare Projects Exempt from Service Tax

The Tribunal held that construction services provided under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) scheme for Surat Municipal Corporation and Safai Kamdar housing are not liable to service tax as they are not commercial in nature. Citing precedents, the Tribunal determined that such constructions intended for residential purposes for the poor are exempt from service tax. The Tribunal also clarified that constructions for government organizations, including the Gujarat State Police Housing Corporation Limited, are not subject to service tax when intended for personal use by the government. As a result, the Tribunal set aside the previous orders and ruled in favor of the appellant, confirming the non-taxable status of the construction services.

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Issues Involved:
1. Liability of the appellant to pay service tax on the construction of residential complex under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) Scheme for Surat Municipal Corporation.
2. Applicability of service tax on construction services provided to Ahmedabad Municipal Corporation under JnNURM and for Safai Kamdar housing.

Summary:

The primary issue in this case was whether the appellant is liable to pay service tax on the construction of residential complexes under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) Scheme for Surat Municipal Corporation. The appellant's counsel argued that this issue is no longer res-integra, citing various judgments where similar constructions under government schemes were held non-taxable.

Upon careful consideration, the Tribunal found that the construction services provided under the JnNURM scheme are not liable to service tax as they are not commercial in nature. This conclusion was supported by previous judgments, including the case of Rjp Infrastructure Private Limited, where it was held that such services are non-taxable.

In a related case, the Tribunal also examined whether the appellant is liable to pay service tax under the category of Construction of Complex service for constructing houses under JnNURM for Ahmedabad Municipal Corporation and for Safai Kamdar housing. The appellant's counsel again argued that the issue is settled by various judgments, including those of M/s. Khurana Engineering Limited and DH Patel, which held that such constructions are not liable for service tax.

The Tribunal confirmed that the construction of residential complexes under the JnNURM scheme and for Safai Kamdar housing is intended for residential purposes for poor people and not for commercial activities. Therefore, these constructions are not liable to service tax. The Tribunal referred to several judgments, including those of M/s. Khurana Engineering Limited and Santosh Katiyar, which supported this view.

Additionally, the Tribunal noted that constructions for government organizations, such as the Gujarat State Police Housing Corporation Limited, are also not liable for service tax. This was supported by judgments in cases like S. Kadirvel and C.R. Patel, which clarified that constructions intended for personal use by government entities are excluded from service tax.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeals, confirming that the construction services under the JnNURM scheme and for Safai Kamdar housing are not liable to service tax.

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