Construction of warehousing godowns remained taxable as commercial construction where the facility could serve commercial and rental uses.

Construction of godowns for a state warehousing corporation was treated as taxable commercial or industrial construction because the scheme materials showed permitted non-agricultural and commercial use, including renting out unutilised space. The warehousing corporation was not regarded as a purely non-commercial body, since it stored agricultural produce as well as other commodities and could earn rent from available space. On that basis, the construction service was treated as an independent taxable service, no exemption was available for the relevant period, and the benefit of abatement under the applicable notification had already been granted.

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Issues: Whether service tax was payable on construction of godowns for the Haryana State Warehousing Corporation up to 30.06.2012 under the category of commercial or industrial construction, and whether exemption was available on the ground that the constructions were for warehousing purposes.

Analysis: The appellants constructed godowns for a public sector warehousing corporation, but the scheme materials showed that the godowns could also be used for non-agricultural and commercial purposes, including being rented out to third parties. The warehousing corporation was engaged not only in storage of agricultural produce but also in storage of other commodities and could derive rent from unutilised space, which showed that it was not a purely non-commercial concern. The construction service rendered by the appellants was treated as an independent taxable service, and no exemption was found available for the period up to 30.06.2012. The benefit of abatement under the relevant notification had already been extended.

Conclusion: Service tax was held payable up to 30.06.2012, and the exemption claim was rejected.

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