https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769153 https://www.taxtmi.com/caselaws?id=769153 Construction of a new building or civil structure or a part thereof, primarily for the purposes of commerce or industry - Works contract services of construction rendered to education institutions and government office buildings - construction of medians can be considered as works contract in respect of roads or not - time limitation. Whether the works contract services of construction rendered to education institutions and government office buildings can be treated as construction of a new building or civil structure or a part thereof, primarily for the purposes of commerce or industry? - HELD THAT:- The adjudicating authority has misdirected himself in rendering the finding that it is the bounden duty of the assessee to ensure that they satisfy the conditions set out for making any claim regarding exempted services. Admittedly, the Department is seeking to tax the services of the appellant as "works contract service" under clause ii(b) of the explanation to Section 65(105)(zzzza), as being "construction of a new building primarily for the purposes of commerce or industry". Unlike a statutory exemption notification issued in exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, prescribing conditions, the circulars issued by CBEC are under Sec. 37B of the Central Excise Act, 1944, as applicable for the purposes of service tax vide Sec. 83 of Finance Act, 1994 and are instructions and directions issued to the central excise officers for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties. The Hon'ble Supreme Court has held in CCE, Bolpur v Ratan Melting & Wiring Industries, [2008 (10) TMI 5 - SUPREME COURT], inte-alia, that so far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. The definition of taxable service of works contract under Section 65(105)(zzzza) of the Act excludes works contract "in respect of" roads. The phrase "in respect of" indicates 'in connection with,' 'as regards', or 'with reference to', in its grammatical sense. There is no dispute that the work entrusted with the appellant is that of construction of center-medians in Coimbatore on Highways No.67 (Trichy Road). The Adjudicating Authority concedes the same. However, the service tax is sought to be levied on the ground that such service is rendered to an Advertising Agency who in turn is engaged in providing advertising which is done in pure commercial considerations. Tribunal in M/s. RGP Construction versus The Commissioner of CGST & Central Excise, Salem, [2024 (7) TMI 1168 - CESTAT CHENNAI]. Therefore, considering the aforesaid decisions of this Tribunal which are binding, the demand of service tax on the works contract services rendered by the appellant to educational institutions that has been upheld in the impugned OIO cannot sustain and is therefore hereby set aside. Whether the construction of medians can be considered as works contract in respect of roads? - HELD THAT:- The definition of works contract service, while excluding works contract in respect of roads, does not contain any stipulations as to the identity of the service recipient, much less the nature of the service recipient's business considerations, and the said contention of the Adjudicating Authority is extraneous in determining the appellant's entitlement to the exclusion from the ambit of the definition as claimed. When the work carried out by the appellant is indisputably conceded as that of constructing center-medians on Highway No.67 (Trichy Road), and since 'center-medians' essentially demarcate and divide the road, the works contract undertaken by the appellant of constructing center medians is clearly a "works contract in respect of roads" so as come within the exclusion specified in the definition. The service tax demand on this activity of the appellant is unsustainable and is therefore set aside. Whether the demand is barred by limitation? - HELD THAT:- The appellant's claim that it has not discharged service tax on the works contract services of construction rendered to educational institutions on a Bonafide belief taking note of the clarifications issued by the Board as per the Circular dated 17-09-2004 cannot be discounted. There is no positive act of wilful suppression or misstatement of facts by the appellant that has been established by the Department. In these circumstances, it is found that the adjudicating authority has grossly erred in invoking the extended period of limitation. The demand is therefore time barred and the issue of limitation is answered in favour of the appellant. Conclusion - i) The demand for service tax on construction services rendered to educational institutions and government buildings, holding that such constructions do not fall within the taxable ambit of works contract services primarily for commerce or industry. ii) Since center medians demarcate and divide roads, their construction falls within the exclusion. Therefore, the Tribunal held that the demand of service tax on construction of center medians is unsustainable and set it aside. iii) The extended period of limitation was wrongly invoked, and the demand is time-barred. Appeal allowed. Case-Laws Service Tax Thu, 17 Apr 2025 00:00:00 +0530