TaxTMI 
TaxTMI 
2025 (8) TMI 646
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....ry, the appellant replied that roads are exempted from service Tax and the construction of educational institutions is also exempted from payment of service tax as per Board Circular No.80/10/2004-ST dated 17.09.2004. That most of their customers are Industries and public charitable trusts having Section 12AA registration under Income Tax Act. The appellant submitted records and relevant particulars for the period 01.10.2008 to 30.06.2012 to the Department and contended that they are not liable to pay service tax. 1.2 However, the Department was of the view that for the period 01.10.2008 to 30.06.2012 the appellant has constructed roads and educational institutions which are commercial in nature and therefore the appellant is liable to pay service tax. The Show Cause Notice No. 112/2013 dated 23.10.2013 was issued for the above period invoking the extended period proposing to demand service tax under Works Contract Services along with interest and also for imposing penalties. Further, Section 73 A of Finance Act was invoked for recovery of Service Tax collected but not paid to Government. 2. After due process of Law, the case was Adjudicated by the Commissioner of Central Exc....
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....leviable viii. The Service Tax Circular No.86/4/2006-S.T., (F.No.137/71/2006-CX.4) dated 01.11.2006 clarified that a "commercial Concern" primarily engaged in commercial Activities is having profit as its Primary aim. It is not one/few isolated activities which determine Whether or not an institution is a commercial concern, but it is the totality of its activity that determines the commercial nature of an institution. This read in consonance with the Service Tax Circular dated 10/09/2004 gives the legal position that Construction of a school or College or an educational institution would fall completely outside the Purview of service tax levy. ix. Reliance was placed on the case of R. Ramadas Vs. Joint Commr. of C.EX., Puducherry [2024 (5) TMI 197-CESTAT CHENNAI] wherein it was held that service tax exemption on road construction and maintenance applies irrespective of whether the road is for public or private use. x. It was further submitted that the reliance placed by the respondent on CBEC Circular No. B1/6/2005-TRU dated 22/07/2005 is incorrect, as the appellant herein had entered into separate contracts for the construction and repair of roads conce....
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....kiln. The bills term this service as "kiln shutdown works". The work involved only maintenance and repair and does not involve any construction activity. Thus this service falls under the category of the taxable service of Management, Maintenance and repair service under Section 65(105)(zzg) of the Finance Act, 1994. 4. Bill Value of Rs. 38,817/- This only represents purchase value of electric chimney. Since no service is involved, this falls outside the scope of the Finance Act, 1994. 5. Bill Value of Rs.4,96,323/- This represents hire charges collected from M/s. Madras Cements Ltd towards hire of one JCB and tractor Even though the JCB and tractor are being lent to their customer namely M/s Madras Cements Ltd., they provided the driver for the JCB. The wages of the driver were provided by the Querist only. In effect, the control and lien over the equipment was still retained by me Querist only 6. Bill Value of Rs. 2,01,935/- This site preparation work is part of construction work of road, it can get exemption vide Notification No 17/2005-S. T. dated 7/06/2005. 7. Bill Value of Rs 69,040/- This related to cons....
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....for Rs. 72,20,573/- Construction of B. T.road and is therefore exempt. 17. Bill Value for Rs. 1,16,445/- This relates to extension of toilet in Vidhya Mandir School, run by M/s. Madras Cements Ltd. As the construction relates to school is exemption. 18. Bill Value Rs. 1,52,105/- Both relates to construction of pipe culvert at mines. This qualifies exemption. 2009-10 19. Bill Value for Rs.25,12,148/- All of them relate to road construction and hence would be a construction activity, qualifying for exemption. Tax wrongly collected and paid is eligible for refund. 20. Bill Value of Rs.8,50,646/- This relates to construction of pipe culvert at mines. This exempt for the reasons stated in opinion for assessment period 2008-09. The tax collected is eligible for refund. 21. Bill Value for Rs 2,74,563/- This relates to supply and filling of red soil for lorry yard. This also qualifies for exemption as this site preparation service relates to construction of road. This is eligible for exemption. 22. Bill Value of Rs. 90,475/- This represents hire charges collected fr....
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.... Ltd., R.R.Nagar 32. Bill Value for Rs.2,14,769/- This represents construction of retaining wall for ramp at mines. A ramp can be described as a road provided it is not inside a building or superstructure. If it is a pathway, this construction will qualify for exemption. 33. Construction work for Rani's House This relates to construction of a single residential unit commenced in 2009-10. This also qualifies for exemption. 34. Construction work for Rajapalayam Rotary Trust The Rajapalayam Rotary Trust is an educational and charitable trust. The work executed for this trust during assessment period relates to construction of school. The querist has raised a query as to whether this construction activity would qualify for exemption. 35. Construction work for Rajapalayam Kshtriya Rajukkal Sinthalapadi Thayathiyargal Trust The Hon'ble Supreme Court in the case of Commissioner of Sales tax Vs Sai Publication 25 Fund (126 STC 288), has held that same of religious books by the Sai Trust is only incidental to the main charitable and religious activity and that in order for a concern to be called commercial, it m....
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.... 42. Bill Value of Rs. 6,34,017/- This is mentioned in the accounts statement as "playground work". This is taxable service falling under "Site preparation and clearance service" (Section 65(105)(zza)). This service includes soil stabilisation and top soil striping work and also land reclamation work. Work at school hockey ground is also mentioned. However, regarding this service, there is no specific exemption either by way of notifications, circulars or judicial pronouncements to my knowledge. Hence tax collected by the Querist has to be paid into the Treasury. 43. Bill Value of Rs.2,40,609/- This represents hire charges collected from M/s. Madras Cements Ltd towards hire of one JCB and tractor. For the reasons stated in opinion for assessment period 2008-09, this service is taxable and the amount collected by way of tax and cess have to be paid into the Treasury. 44. Bill Value of Rs.65,353/- This is termed as cleaning work and includes cement cleaning, tunnel spillage cleaning, limestone cleaning and the like. As per the definition of cleaning activity given in Section 65(24b) of the Finance Act, 1994, cleaning of the premise....
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....chool. The querist has raised a query as to whether this construction activity would qualify for exemption. 54. Construction work for Rajapalayam Kshtriya Rajukkal Sinthalapadi Thayathiyargal Trust The Hon'ble Supreme Court in the case of Commissioner of Sales tax Vs Sai Publication Fund(126 STC 288), has held that same of religious books by the Sai Trust is only incidental to the main charitable and religious activity and that in order for a concern to be called commercial, it must carry on an activity that termed as "trade" even if there is no profit. The discussion with Querist has made it quite clear that the above mentioned trust is for charitable purpose and hence the construction in relation to this trust cannot come within the ambit of Section 65(105)(zzq). Hence this work is fully exempted from Service Tax. 55. Construction work for M/s. S.A.P.R.Construction (P) Ltd This represents the sub-contracting work done for their sister concern and this relates to construction of Nursing College. So, the work is also exempted. 56. Construction work for Chinmaya Vidhyalaya School The bill value for this work is Rs.4,770/- con....
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....nicipality The taxable service of Commercial construction Section 65(105)(zzq) forms part of "work contracts service" Section 65(105(zzza). Hence the elaborate definition of "Commercial construction service" has to examined in order to find out whether the particular works contract service rendered is a taxable service or not. 65. Construction work for N.A. Manjammal Polytechnic College Construction of educational institution is eligible for exemption. 66. Construction work for Vishnu Shankar Mills Ltd This is a taxable service as it falls under Commercial construction and works contract service. The tax and cess on the bill value of Rs.5,15,279/- has been rightly collected. 67. Construction work for M/s. Vishal Industries The bill value relates to construction of factory building. This is a taxable service as it falls under Commercial construction and works contract service. The tax and cess on the bill value of Rs.6,00,000/- has been rightly collected. 68. Construction work for M/s. Mukesh Honda The bill value to construction of Honda showroom. This is a taxable service as it falls under Commercial c....
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....ctober, 2004 to March, 2005 i.e. prior to the demand period, and did not file ST-3 Returns thereafter. 10. The recipients of the major part of the services of construction of Commercial or Industrial Building and Civil Structures, roads, compound wall etc., are Madras Cements, Sudarshanam Spg Mills, Ramaraju Surgical Cotton Mills, Vishaal Industries, N.R. Krishnamoorthy Raja & VSML. For all these clients, the activity includes Laying of roads within the factory premises, construction of Culverts, repair of roads, repair of railway siding, construction of residential staff quarters, Lorry yard construction, construction of compound wall, retaining wall at ramp at mines, RCC Framed Plant Room Building, Construction of cement platform etc. The impugned order has classified the services under works contract. All the works relating to roads pertain to the units of M/s. Madras Cements and the construction of roads was either in factory premises or at the mines and these activities are held as Works Contract Services in the impugned order as there is transfer of property in goods a fact which is not disputed. 11.1 We note that Works contract service (WCS) was added to the list of ta....
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....ompletion, fitting out, repair, maintenance, renovation or alteration of a road, bridge, tunnel or terminal for road transportation for use by general public were exempted vide notification dated 20 June 2012." 11.3 Commercial or industrial construction is defined under Section 65(25b) of the Act, which reads as under: - "(25b) ["commercial or industrial construction"] means- (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is - (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily i....
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....the appellant had rendered inter alia the services of road construction in private commercial premises of Neyveli Lignite Corporation, and thus claimed the benefit of Notification No. 24/2009-ST ibid. The Notification No.24/2009- ST dated 27.7.2009 provides for exemption of service tax on management, maintenance or repair of roads and the new Section 97 introduced vide Finance Act, 2012 gave retrospective amendment to this notification w.e.f. 16.06.2005. The above said Notification No.24/2009-ST or amendment Notification No.54/2010-ST dated 21.12.2010 and new Section 97 of Finance Act, 2012 does not state in any place that "the exemption from payment of service tax is only with respect to public utility roads". In this regard, we note that the orders relied upon in the case of Rajendra Singh Bhamboo Vs. CCE & ST Jaipur-I [2019 (22) G.S.T.L 278 (Tri.-Del.)] and NMC Industries Private Ltd. Vs. CST Mumbai [2020 (43) G.S.T.L 551 (Tri.-Mumbai)] are apt. In the ST/42273/2014 case of Rajendra Singh supra, it has been held as under: "7. On perusal of the above definition, it would reveal that construction of roads is excluded from the purview of such taxable service. The definitio....
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....t thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; Hence, we hold that the construction of buildings for the industrial establishments mentioned supra are chargeable to service tax under "Works Contract Service", since there is transfer of property in goods involved in the execution of such construction. However, in respect of residential construction for workers, the contract copies / scope of activity have to be examined as to the taxability. 13.1 Next, we come to the taxability of construction of Schools, colleges and Nursing home/hospitals for Trusts/Charities covered under Section 12A/12AA of IT Act 1961. 13.2 We have perused the nature of services provided as described in the impugned order for construction of schools and colleges and hospitals to Trusts and it has been held that the buildings constructed by Appellant are used as class rooms, labs and hospitals which are said to run on commercial basis as the school/college administration charge fees from the students. 13.3 The impugned Order-in-Original accepts that the educational institutions are run by charitable trusts but denies the benefit on the ground that there is....
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....tutions solely established for education, charitable purposes are not subject to service tax: The Principal Bench, Delhi Tribunal in Jyoti Sarup Mittal V. CCE [2017 (3) G.S.T.L. 478 (Tri.-Del.)] has held that when construction Services are undertaken for educational institutions, Service tax is not leviable. Further, the Service Tax Circular No.86/4/2006-S.T, (F.No.137/71/2006-CX.4) dated 01.11.2006 has clarified that a "commercial concern" is an institution/establishment that is Primarily engaged in commercial Activities having profit as its Primary aim. It is not one/few isolated Activities which determine Whether or not an institution is a commercial concern but it is the totality of its activity that determines the commercial nature of an institution. When this is read in consonance with the Service Tax Circular dated 10/09/2004, it gives the legal position that Construction of a school or College or an educational institution would fall completely outside the Purview of service tax levy. In the case of M/s. R.R. Thulasi Builders (India) Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Salem, [F.O.No. 41242/2019 dated 31.10.2019] Tribunal Chennai has held that even....
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....pective bills and held that the Appellant has collected service tax consciously and he was fully aware of the taxability of his services at the time of provision of services and that having retained the service tax so collected, he now wants to escape from the huge tax liability by claiming that most of the services provided by him for M/s Madras Cements Ltd are laying of roads. 17.2 Section 73 A of the Finance Act, 1994 (as amended from 18 April 2006), provides that any person, who is liable to pay service tax and has collected any amount in excess of the service tax assessed, shall forthwith pay the amount so collected to the credit of the Central Government. 17.3 We refer to Para 2.3 of the SCN where there is a mention that the Appellant has collected service Tax of Rs 31,14,588 (Page 42 of Appeal paper book) from Madaras Cements. Section 73A of the Finance Act, 1994, mandates that any service tax collected in excess of the assessed or determined amount must be deposited with the Central Government forthwith. The term "forthwith" is interpreted as requiring reasonable promptness. 17.4 Here it is immaterial whether the Tax is payable or not, but once an amount is collect....
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.... as per his own submission. To make the matter worse, he has retained the service tax collected from the Customers without depositing the same in to the exchequer thus enrichening himself at the expense of Revenue. In the absence of assessed Tax liability in the ST3 Returns, it is presumed that the non-payment of service Tax was intentional and deliberate and more so, when the service tax has been collected from the recipients of service. Thus, the intention to evade payment of service TAX is explicit in this case. Had the evasion of service not brought to light, through the intelligence and investigation of DGGEI officials. a huge revenue would have been lost and SRK would have gone Scot free. Under the circumstances, it is highly improbable that non-payment of service Tax is due to ignorance and accordingly, invoking of extended period under proviso to Section 73(1) of the Act in the case is justified". 18.3 We are in perfect agreement with the findings of the Learned Adjudicating authority on this score. The provisions of Section 73A and proviso to Section 73(1) of the Act can be simultaneously invoked as Section 73A can be invoked for the reason that the appellant has collec....