TaxTMI 
TaxTMI 
2018 (7) TMI 620
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....zations / agencies like Slum Clearance Board, Housing Board etc., Department takes the view that assessee is required to discharge service tax liabilities under CICS, Construction of Complex defined in Section 65 (30a) of the Act; (ii) With respect to works related to widening and deepening of canals, construction of flood protection wall, construction of storm water drain, construction of diversion channel etc. for Government agencies like water resources department, Government of Tamil Nadu Water Resources Department, Palar Basin Authority etc., Department took the view that these activities fall under the category of 'dredging service' as defined in Section 65 (36a) of the Finance Act, 1994 and hence service tax should have been discharged on the value of taxable service involved. (iii) Assessee had constructed civil structures / compound wall, retaining wall, pipe line works for TNSCB, on which activity, department took a view that that assessee should have discharged service tax liability under Commercial or Industrial Construction Services (CICS) as defined in Section 65 (25b) of the Act. For certain periods, such construction work has been alleged to be falling within Work....
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.... Royal Orchid Bangalore 4,27,079 4,27,079 Chennai Metro Development Authority I 1,71,125 1,71,125 (Confirmed totalling to Rs. 2,90,058) Chennai Metro Development Authority III 75,662 75,662 Public Works Department Trichy 43,271 43,271 Public Works Department Cuddalore 88,774 Not Confirmed Sriram Aveneue, Coimbatore 8,925 8,925 Pudhukottai Municipality - Shopping Complex 2,12,455 2,34,127 TOTAL 6,61,18,056 6,52,95,618 ST/40066/2014 SCN NO 108/2011 dated 18.10.2011 OIO No 08/2013 dated 7.10.2013 POD April 2010 to March 2011 Royal Orchid Bangalore 1,68,251 1,68,251 Interest Under Section 75 Penalty of Rs. 200 per or Rs. 10,000 under Section 77 for non registration Penalty of Rs. 10,000 for non- filing of returns Penalty of Rs. 200 or 2% under Section 76 till the date of payment of Tax. Tamil Nadu Slum Cleareance Board 85,32,053 85,32,053 Karnataka Slum cleareance Board 2,39,974 2,39,974 Karnataka Housing Board 99,73,813 99,73,813 Dredging Service 3,30,05,290 3,30,05,290 CMDA - I (MMRS) 1,92,114 1,92,114 CMDA - III (ECIS) 2,41,403 2,41,403 TOTAL 5,23,52,898 ....
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....projects were undertaken by the assessee as under: 1. Southern Basin Package VII (Velacherry) 2. Package I (Kodungaiyur) 3. Package III (Buckingham canal) 4. Package II (Maduravoyyal) 5. South Buckingham Canal 1. Name of the Project : Southern Basin Package VII (Velacherry) Service Tax liability in respect of these projects has been demanded in impugned orders No.8/2013-ST dt. 7.10.2013 (Appeal No.ST/40066/2014), 5/2014 dt. 28.3.2014 (ST/41599/2014) and 4/2015 dt.30.4.2015 (ST/41748/2015). These projects basically involve works for improvement to Veerangalodai drainage course channel like widening and deepening of canal, widening the water ways of existing bridges etc., diversion of drainage channel from Velacherry to South Buckingham canal as back water. The adjudicating authority has held the services to be Dredging Services. However, the Ld. Advocate puts forth the following contentions: * Assessee is not providing Dredging Services as defined under section 65 (36a) of the Finance Act, 1994 but are only providing construction activities which fall outside the ambit of dredging and are only classifiable under works contract services as under section 65 (105) (zzzza)....
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....ervice Tax liability in respect of this project has been demanded in impugned orders No.8/2013-ST dt. 7.10.2013 (ST/40066/2014), 5/2014 dt. 28.3.2014 (ST/41599/2014) and 4/2015 dt.30.4.2015 (ST/41748/2015). It is submitted that the work undertaken by the assessee is for improvements to North Buckingham canal like widening and deepening, construction of flood protection wall and fencing in vulnerable place, providing access ramp for maintenance, providing inlet arrangements widening the water ways of bridges etc. This cannot be classified as dredging service of a river. The presumption that VeerangalOdai is a river is incorrect. The adjudicating authority confirmed the demand relying both Circular No.116/20/2009-ST dt. 15.09.2009 with the case law reported in 2010 (19) STR (Tri.-Kolkatta). 4. Name of the Project : Package II (Maduravoyal) Service Tax liability in respect of this project has been demanded in impugned orders No.8/2013-ST dt. 7.10.2013 (ST/40066/2014), 5/2014 dt. 28.3.2014 (ST/41599/2014) and 4/2015 dt.30.4.2015 (ST/41748/2015). The work undertaken by the assessee is for improvement to the outlet, drainage course and construction of diversion channel from Maduravoyal....
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....tax under Commercial Complex service. In the impugned order dt. 7.10.2013 (ST/40066/2014) adjudicating authority has denied benefits given in Master Circular 96/2005 dt. 23.08.2007 on the ground that houses built for Slum Clearance Board are meant for sale to the allottees. In impugned orders dt. 28.3.2014 (ST/41559/2014) &dt. 30.4.2015 (ST/41748/2015), the adjudicating authority has held that the construction of residential complex are liable to be taxed under Works Construction Service but compensation scheme should not be extended since assessee has not opted for the same and service tax has been determined as per Rule 2A of Valuation Rules. The related submissions of the assessee in this regard are as follows : * The demand prior to 01-06-2007 is liable to be set aside in view of the Supreme Court decision in State of Kerala Vs. Larsen & Toubro Ltd. - 2015 (39) STR 913 (SC). Therefore the services which are classifiable under works contract from 1.6.2007 could not have been classified in any other service as it existed then by virtue of the fact that there was no requirement for transfer of property on which VAT or sales tax was required to be paid. The construction of the re....
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....d renewals of electrical installation of Iron and steel market complex at Sathangadu in relation to Chennai Metropolitan Development Authority (CMDA). Demand of Rs. 1,92,115/- has been confirmed by the impugned order dt.7.10.2013 (ST/40066/2014) for the period April 2010 to March 2011.Assessee submits that though the Adjudicating Officer has extracted Section 98 of the Finance Act 1994 according to which, Management, Maintenance or Repairs of non- commercial Government buildings during the period on and from 16.06.2005 till the date of insertion of new Section 66B comes into force is exempted, however has confirmed the demand. The Iron and Steel market complex is a government building. The conclusion of the adjudicating officer that it is used for commercial purposes is one traversing beyond the SCN and therefore it is liable to be set aside. Further the assessee submit that any service rendered for the generation of electricity is not liable to service tax prior to 2010. Reliance is placed on the decision in M/s West Bengal State Electricity Transmission Company Ltd. Vs CST, Kolkata - 2015- TIOL-739-CESTAT-KOL. Tax demand of Rs. 75,662/- has also beendemanded on the said activity ....
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....n. In the instant case, the construction or original works under taken, rightly falling within the ambit of clause 12(a) of the notification. Further in para 5.7 of order in original it has been stated that the services are provided to BDA and not to the allottees of housing units of BDA/KHB. It is submitted that the assessee is entitled to exemption granted under mega exemption Notification No.25/2012 Dt. 20.06.2012. IV) Commercial or Industrial Construction Service (CICS) (i) Name of the Project : Project Pudukottai Municipality Shopping Complex The project was undertaken by the assessee for the period June 2005 to October 2005. SCN has demanded service tax liability under Commercial or Industrial Construction Service (CICS). The demand has been confirmed by the adjudicating authority in the impugned order dt.28.09.2012 (ST/40066/2013). Assessee submits that most of the complexes constructed were occupied by the municipality for their own purposes. In para 12.02 of the SCN at page 168, the total tax payable is Rs. 2,12,455/-, whereas at para21.02 in the impugned order, the demand confirmed is Rs. 2,34,127/-. Thus the demand in the impugned order is an excess of the demand made....
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....us Terminal - Fire Fighting System . In the impugned order dt. 28.09.2012 (ST/40066/2013) adjudicating authority has classified the works under CICS. Assessee submits that in SCN, the proposed demand under commercial construction service, whereas adjudicating authority has demanded under ECIS. Hence demand is beyond the scope of SCN. 6.1 On behalf of the Department, Ld. A.R Shri K. Veerabhadra Reddy supports the impugned orders. The following submissions were made by Ld. AR on each service rendered by the assessee : 6.2 (I) Dredging Service : i) The activities of the assessee related to widening and deepening of canals, widening water ways of existing bridges etc. would fall within the definition of 'dredging' in Section 65 (36a) of the Finance Act, 1994. ii) As analyzed by the adjudicating authorities, dredging is not related to ports, harbours alone. The CESTAT in the case of Mackintosh Burn Ltd. Vs CST Kolkata - 2010 (19) STR 682 (Tri.-Kol.) held that dredging is not limited to maintenance of shipping channels but will also include widening or desilting of river, backwaters and tributaries. iii) The SCN itself indicates that North and South Buckingham canals or backwaters,....
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....8/2010-ST dt. 22.06.2010, the adjudicating authority has correctly denied the exemption since the construction in those cases started earlier to the date of notification. iv) With regard to construction activity undertaken by assessee for Royal Orchid Hotel Bangalore, he submits that the work involved covering of the storm water drain with RCC slabs located in the Royal Orchid Hotel Bangalore. Ld. AR submits that Ld. Adjudicating authority has correctly found that there are commercial considerations for improving the hotel accommodation and it was the reason Royal Orchid to have got done this work through assessee. No evidence has also been submitted by assessee to the adjudicating authority that the work was being done on behalf of municipal corporation. Hence the confirmation of demand on these works undertaken by assessee under the commercial construction business is very much justified. v) For the same reasons, construction service provided by assessee to Pudukottai Housing Complex, Sri Ram Avenue, Coimbatore, Power Grid Corporation Ltd. etc. will all come within the purview of 'Commercial or Industrial Construction Service' 6.4 (III ) Management, Maintenance or Repair Servi....
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....redging" includes removal of material including, silt, sediments, rocks, sand, refuse, debris, plant or animal matter in any excavating, cleaning, deepening, widening or lengthening, either permanently or temporarily, of any river, port, harbour, backwater or estuary; 9.2 Thus, as per the definition in the Finance Act, 1994, the following key ingredients must be present for the activity to fall in the fold of 'dredging service' :- An activity like removal of material like silt, sediments, rocks, sand, refuse, debris, plant or animal matter; Such removal activity is done in any excavating, cleaning, deepening, widening or lengthening, either permanently or temporarily, Such'dredging' is done in a river, port, harbour, backwater or estuary. 9.3 From the above analysis, it emerges that to constitute dredging, the activity should encompass both removal of material like silt etc. and only related to or while excavating, cleaning etc. of a river, port, harbour, backwater or estuary. By implication, similar activity when done for lakes, ponds or canals cannot be brought under the definition of "dredging" for the purposes of Section 65 (36a) ibid. 9.4 To better understand the acti....
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....d as : Late 15th century (as a noun; originally in dredge-boat): perhaps related to Middle Dutch dregghe 'grappling hook' The word Dredged (Noun) is defined as : A boat designed for dredging harbours or other bodies of water. 9.4.4. As per the Macmillan Online Dictionary 'Dredge (Verb)' means, to : 1. to remove dirt and sand from the bottom of a river or lake Synonyms and related words To dig: dig out, dig up, dig... a. to look for something at the bottom of a river or lake using a dredger Synonyms and related words To search for something or someone: go through look out for, seek out.... A 'Dredger (Noun)' is described as : 1. a boat with equipment for removing dirt and sand from the bottom of a river or lake Synonyms and related words Types of boat or ship: barge , boat, bowser... 2. a container used for shaking something such as sugar or flour onto something Synonyms and related words Crockery used for serving and pouring food and drinks: bowl, breadbasket, cafeteria... 9.4.5 As per the Cambridge Online English Dictionary, the word 'Dredge (Verb)' means to : * remove unwanted things from the bottom of the river, lake, etc. using a boat or speci....
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.... wall using cement and steel. In respect of Package I (Kodungaiyur), the assessee has been entrusted with construction of diversion channel from Kolathur tank to Madavaram Tank and widening the construction of flood protection wall to OtteriNullah. In respect of Package III (Buckingham Canal) assessee is widening and deepening construction for flood and storm water and fencing the same and providing inlet arrangements. In respect of Package II (Madhuravoyal), assessee has undertaken drainage of storm water to Cooum, in the shape of a trapezium wherein bottom and both sides were fully packed with concrete for free flow of waste affluent or the storm water and drain of excess rain water. In respect of the project South Buckingham Canal also, they have carried out similar work and connected with draining of storm water to Cooum involving packing of bottom and both sides with concrete. 9.10 The adjudicating authorities have reached a facile conclusion that OtteriNullah is a river. On researching the matter, we find that the said Nullah is nothing but a East-West water way which runs through North Chennai and it is seen as a major outlet for effluent water in North Chennai to flow ....
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....i) TNSCB - ETRP, Thoraipakkam, Tenants at AIR land at Tiruvottiyur - Rs. 3,16,91,686 (iv) TNSCB - Perumbakkam (Under JNNURM), Semenchery, Madurai (Rajjakur), Madurai (Ellis Nagar) & Filling of low lying area and construction of retaining wall at RP Nagar, Madurai - Rs. 2,49,66,402/- Period :2005 - 2015 Appeals : ST/40066/2013, ST/40066/2014, ST/41748/2015, ST/42180/2017 10.2 The tax liability has been demanded under construction of residential complex service in impugned orders relating to Appeal ST/40066/2013, ST/40066/2014 ST/41748/2015 & ST/42180/2017. Benefit of exemption Notification No.25/2012-ST is also denied. 10.3 We find that the periods of demand in all these disputes related to construction of residential complexes for KHB etc. spans from 2005 to 2015. We find merit in the appellant's contention that demands on this score prior to 1.6.2007 is liable to be set aside in view of the decision of the Hon'ble Apex Court in CCE & CC Kerala Vs Larsen & Toubro Ltd. - 2015 (39) STR 913 (SC). So ordered. 10.4 In respect of demands for the periods subsequent to 1.6.2007, we find that in a number of decisions, the higher appellate forums have consistently held that there is....
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....tosh Katiyar Vs CCE Bhopal - 2017 (3) GSTL 2003 construction of small units of jhuggi dwellers without cost or highly subsided cost under Rajiv Awaas Yojana and Jawaharlal Nehru National Urban Renewal Mission (JNNURM) are exempted from service tax since constructed under Central sponsored scheme. In CC, CE & ST, Allahabad Vs Ganesh Yadav - 2017 (6) GSTL 428 (Tri.-all.) construction of low cost house or housing for economically weaker sections for Varanasi Development authority was held to be a scheme neither intended for commerce or industry and further held as not taxable either under WCS or under CICS. 10.6 In impugned order No.05/2012 dt. 28.09.2012 (Appeal ST/40066/2013) the work of (i) filling low lying area and (ii) construction of retaining wall at RP Nagar, Madurai under JNNURM has been held as composite work of construction of 720 tenements at the same site and part and parcel of construction of residential complex services only. Be that as it may, as already held supra, the services in relation to construction of such tenements will not be exigible to service tax liability. Tax liability demanded in respect of these works will also require to be set aside, which we here....
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....08-2011 Impugned Order : 05/2012 dt. 28.09.2012, 8/2013 dt. 7.10.2013 Demand : Rs. 4,27,079/- & Rs. 1,68,251/- Total Rs. 5,95,330 Appeal : ST/40066/2013 & ST/40066/2014 The copy of agreements dt. 19.7.2008 & 30.0.3.2009 entered into between the appellant and Royal Orchid Hotel, Bangalore are found in pages 703 and 709 of the compilation respectively. Appellants have argued that construction is for covering of storm water drain in front of the hotel and nto inside the hotel. They have also contended that cost of works should have been borne by the municipality hence there could be no service tax levy on them and hence the same work should be considered as performed by municipality themselves. However, on perusal of the letter dt. 30.03.2009 of the municipality to the Royal Orchid Hotel on page 709 of the compilation, it is seen that the hotel has been advised that the covering of storm water drain has to be carried out only as per approved plan and that the construction being carried out by the hotel should be stopped immediately. It is also noted that the payments to the appellants in this regard were made not by the municipality but by the Royal Hotel Orchid, Bangalore only. ....
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....6/2014 (impugned order dt. 7.10.2013), the SCN dt. 18.10.2011 at para 08.03 has proposed demand on the said activity under Management, Maintenance or Repair Services (MMR). The adjudicating authority in the impugned order dt. 07.10.2013 has also confirmed tax liability of Rs. 1,92,115/- under MMR services. We find that as per the work order, the work carried out is only renewal/maintenance of electrical installations at the said market place. This being so, the work is surely in the nature of "maintenance or repairs including reconditioning or restoration or servicing of any goods ....." and accordingly the activity will squarely fall within the category of Management, Maintenance or Repair (MMR) services during the impugned period. The tax liability of Rs. 1,92,114/- will therefore sustain. Appeal to that extent is rejected. So ordered. 11.8 (a) Name of the Project : Chennai Metropolitan Bus Terminus (CMBT) Period : April 2009 to July 2009 Demand Rs. 1,71,125 Impugned Order : 05/2012 dt.28.09.2012 Appeal : ST/40066/2013 (b) Name of the Project : Chennai Metropolitan Bus Terminus (CMBT) Period : April 2010 Demand : Rs. 2,41,403 Impugned Order : 07.10.2013 Appeal : ST/4006....
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....Rs. 43271 in the SCN dt.21.10.2010) Impugned Order No.05/2012 dt. 28.9.2012 Appeal : ST/40066/2013 In the show cause notice, there is no indication of the tax amount allegedly defaulted in the body of SCN. However in page 13 of the impugned order, there is a reference to receipt of Rs. 12,73,059/- from Public Works Department (PWD), Trichy for the above works. The same amount of Rs. 12,73,059/- is reflected in Annexure-III to the SCN where a demand of Rs. 43,271/- is proposed under CICS. However, the adjudicating authority in the impugned order, in para 12.04.03 refers to receipt amounts of Rs. 14,34,456/- and Rs. 13,40,061/- and has confirmed a demand of Rs. 2,90,058/-. Further, the adjudicating authority holds that the activity is more correctly classifiable under ECIS. When the adjudicating authority has gone beyond the scope of the SCN, the demand thereof cannot be sustained. In any case, the services have been provided in relation to construction activity in academic block of a University and even on this score, the services will not be exigible to tax. For these reasons, the tax demanded on this activity is set aside and appeal in this respect succeeds. 11.10 Name of work....
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....ned Order : 5/2014 dt. 28.3.2014 Appeal No.ST/41559/2014 12.1.2. Dispute :With held amount : Rs. 20,01,055/- Period : 2012-13 Impugned Order No.04/2015 dt. 30.04.2015 Appeal : ST/41748/2015 These demands have been confirmed respectively for projects undertaken for KHB for an amount of Rs. 2,18,81,094/- and for TNSCB for an amount of Rs. 1,61,89,762/-. As already held by us herein above, the services provided to Karnataka Housing Board (KHB), TNSCB etc. are not exigible to service tax, ergo, there can be no tax liability on these "withheld amounts" also. Demands made on this score in the respective impugned orders cannot sustain and are therefore set aside. 13. Coming to the penalties, it cannot be denied that there was some amount of confusion on the taxability or otherwise of those activities. It must be kept in mind that appellants have provided services only to Government bodies like Housing Boards, Slum Clearance Boards, CMDA, BDA etc. It is understandable that such service provider would have taken a view that such services are not liable to tax. In the circumstances, the penalties imposed in all these appeals, including in respect of liabilities upheld herein above are....