2009 (12) TMI 400 - AT - Service Tax

Tax Appeal Dismissed for Construction Services at Rail Warehousing Complex

The appeal pertained to a refund claim for construction services provided for godowns at a Rail side Warehousing Complex. The appellants argued that the ... Refund- whether the warehouse complexes constructed by the appellants on Railway side against the award of contract by the Central Warehousing Corporation, an undertaking of Government of India, the appellants are covered in the category of Commercial and Industrial Construction Services or not. Held that- Commercial construction done on behalf of government and premises let out earning revenue. Impugned activity covered under commercial or industrial construction service. Appeal rejected. Issues:Refund claim for service rendered for construction of godowns at Railway yard under the category of Commercial and Industrial Construction Services.Analysis:The appeal pertains to a refund claim by the appellants for services provided during a specific period for the construction of godowns with ancillaries, roads, and electrical installations at a Rail side Warehousing Complex. The appellants argued that the services provided are not covered under Service Tax as the Railway has been excluded from the scope of commercial and industrial construction services. The appellants, a Private Limited Company, were awarded a contract by the Central Warehousing Corporation. A Service Tax audit revealed that the construction of warehouses at the Railway yard falls under the category of Commercial and Industrial construction services as defined under Section 65(25b) of the Finance Act, 1994. The departmental officers demanded payment of service tax, leading to the appellants filing a refund claim that was rejected by lower authorities, prompting the appeal.The main issue in question was whether the construction of warehouse complexes on Railway side, awarded by the Central Warehousing Corporation, falls under the category of Commercial and Industrial Construction Services. The Board Circular clarified that structures used for commerce and industry are subject to service tax, while those used for non-commercial purposes like education or charity are exempt. The judgment noted that commercial constructions done for the government, which generate revenue through letting out purposes, are indeed covered under Commercial and Industrial Building Construction services. Consequently, the appeal was dismissed based on this understanding, as the construction in question fell within the taxable category.In the absence of representation by the appellant during the final hearing, the Tribunal considered the submissions in the appeal memo and heard the Departmental Representative. The judgment highlighted the distinction between commercial and non-commercial constructions, emphasizing that constructions for profit-making purposes are taxable under service tax laws. Based on the observations made during the hearing, the Tribunal found no merit in the appeal and rejected it. The judgment concluded with the decision being dictated and pronounced in court, affirming the dismissal of the appellant's claim for a refund on the grounds that the construction services provided fell within the taxable category of Commercial and Industrial Construction Services.