Service tax classification depends on the true nature of work, not labels, survey declarations, or land records.

Service tax classification turned on the true nature of the contracts and surrounding facts, not on labels alone. Site formation work on agricultural land was held outside the agricultural exclusion because it was carried out for real estate development, while construction for educational institutions and a hydro-electric undertaking was not treated as commercial or industrial construction since those projects were not primarily commercial or industrial in character. Residential blocks with fewer than twelve units each did not satisfy the statutory residential complex threshold merely because the aggregate exceeded twelve. A survey declaration, without proof that taxable services were actually rendered, was insufficient to sustain demand.

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Issues: (i) Whether site formation and clearance services rendered on agricultural land for real estate development were taxable; (ii) Whether construction services rendered to educational institutions and a hydro-electric undertaking fell within commercial or industrial construction; (iii) Whether construction of residential blocks for a housing authority constituted construction of a taxable residential complex; and (iv) Whether tax demand could be sustained on the basis of income declared during survey proceedings.

Issue (i): Whether site formation and clearance services rendered on agricultural land for real estate development were taxable.

Analysis: The exclusion in the definition of site formation and clearance, excavation and earthmoving and demolition applies to services provided in relation to agriculture. The land was agricultural in revenue records, but the contracts and surrounding circumstances showed that the work was undertaken for real estate development by builders and not for agricultural activity. The agricultural character of the land alone did not bring the service within the exclusion. The reasoning adopted in the comparable precedent on similar facts was followed.

Conclusion: The demand on site formation service was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether construction services rendered to educational institutions and a hydro-electric undertaking fell within commercial or industrial construction.

Analysis: Commercial or industrial construction covers buildings or civil structures primarily used for commerce or industry. The mere collection of fees, consultancy charges, hostel charges, or the sale of electricity did not make the institutions or the project buildings primarily commercial or industrial in character. The nature of the institutions and the projects remained non-commercial in the statutory sense.

Conclusion: The dropped demand under commercial or industrial construction service was correctly disallowed, in favour of the assessee.

Issue (iii): Whether construction of residential blocks for a housing authority constituted construction of a taxable residential complex.

Analysis: Taxability under the definition of residential complex depends on a building or buildings having more than twelve residential units in the relevant complex as understood by the provision. The blocks in question each had fewer than twelve units, and the fact that the aggregate number across multiple blocks exceeded twelve did not satisfy the statutory requirement. The Commissioner's view that the activity was outside the charging provision was upheld.

Conclusion: The demand on construction of complex service was not leviable and the assessee succeeded on this issue.

Issue (iv): Whether tax demand could be sustained on the basis of income declared during survey proceedings.

Analysis: A tax demand cannot be affirmed merely because income was declared during survey unless the Revenue establishes that the income was earned by providing a taxable service. On the record, that link was not established. Since several activities were found to be non-taxable or exempt, the declaration alone was insufficient to fasten service tax liability.

Conclusion: The demand based on survey declaration was rightly dropped and the assessee succeeded.

Final Conclusion: The assessee succeeded on the site formation demand and the Revenue failed on all challenged heads; the cross appeals were thus resolved in favour of the assessee, with the confirmed and dropped demands aligned accordingly.

Ratio Decidendi: For service tax classification, the statutory exclusion must be applied according to the true nature and purpose of the service as shown by the contracts and surrounding facts, and taxability cannot be inferred from the mere agricultural character of the land, the incidental collection of charges by an institution, or a survey declaration unaccompanied by proof of a taxable service.

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