AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1022
X X X X Extracts X X X X
X X X X Extracts X X X X
....ady appropriated) (iv) Penalty of Rs. 14,91,935/- u/S 78 of the Finance Act, 1994 is upheld. (v) Penalty of Rs. 10,000/- u/S 77 of the Finance Act, 1994 is upheld. 2.1 The Appellant are registered with the Service Tax Department as provider of 'Construction Services other than residential complex, including commercial/industrial building or civil structures'. They have Registration No. ABZPA4108MST001. Acting on the intelligence that the Appellant was not discharging complete Service Tax liability on various taxable services provided by them, the premises of the Appellant were visited on 17.05.2010. Certain records and documents were received under Panchnama on the same date. Statement of Shri Ajay Singhal, Accountant of the Appellant who was present at the time of search was recorded and in his statement he submitted as follows:- (a) that Shri Anubhav Agarwal was the proprietor of M/s Anubhavi Construction, whose office was at 171/1, Hotel Abu Tower, Abu Lane Meerut: (b) that M/s Anubhavi Constructions was engaged in taking contracts relating to all type of Electrical works including Erection of Tubular Poles: (c) that old records in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion to them; "Erection Commissioning & Installation Services" 2.4 Appellant was also providing Business Auxiliary Services and was also required to pay Service Tax on the GTA Services. 2.5 From the scrutiny of records it transpired that the Appellant had received against total contract value of Rs.6,11,76,623/- an amount of Rs.4,30,75,271/-. The total abatement as per the Notification No.1/2006-S.T. dated 01.03.2006 comes to Rs.2,81,72,556/- thus the net taxable value inclusive of the Service Tax and CESS leviable comes to Rs.1,49,02,715/- and the net taxable value would be Rs.1,34,46,294/-. The Applicable Service Tax on this taxable value inclusive of CESS was Rs.14,56,421/-. 2.6 As per balance sheet of the Appellant, the Appellant had received an amount of Rs.24,547/- on account of commission. This commission received was required to be taxed under the category of Business Auxiliary Services. The Appellant short paid Service Tax of Rs.2,528/- including CESS on this account. 2.7 It was also observed that the Appellant had paid Rs.12,24,594/- towards freight. Thus they were required to pay Service Tax on this account in respect of GTA Services received by them on rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted as per Order-In-Original No.54/JC/M-I/2014 dated 10.07.2014 confirming the demand proposed in the Show Cause Notice alongwith interest and penalty under Section 78 equivalent to the amount of tax demanded was imposed and penalty of Rs.10,000/- was imposed under Section 77. The amount deposited by the Appellant during the course of investigation was appropriated. 2.12 Aggrieved, Appellant filed appeal before the Commissioner (Appeals) which has been disposed of as per the impugned order. 2.13 Aggrieved, Appellant have filed this Appeal. 3.1 We have heard Shri Anurag Mishra, Advocate for the Appellant and Shri A. K. Choudhary, Authorized Representative for the Revenue. 3.2 Arguing for the Appellant learned Counsel submits that:- ⮚ The Service Tax is not leviable on Erection, Commissioning and Installation services. Reliance is placed on o Circular No.123/5/2010-TRU dated 24.05.2010. o Rajeev Electrical Works [C.E.A. No.64 of 2008 dated 11.05.2010] o R.S.T. Infocom (P.) Ltd. [Service Tax Appeal No.7244 of 2021 dated 28.09.2021] ⮚ The Show Cause Notice is vague and is therefore Void Ab Initio as held in followin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n use, renting it out or for selling it subsequently) are not taxable service providers. However, if such real estate owners hire contractor/contractors, the payment made to such contractor would be subjected to service tax under this head. The tax is limited only in case the service is provided by a commercial concern. Thus service provided by a laborer engaged directly by the property owner or a contractor who does not have a business establishment would not be subject to service tax. 13.2 The leviability of service tax would depend primarily upon whether the building or civil structure is 'used, or to be used' for commerce or industry. The information about this has to be gathered from the approved plan of the building or civil construction. Such constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government con....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellant is totally untenable because the service provided clearly satisfies the definition of "Commercial or Industrial Construction Service (CICS). In this regard, there is no ambiguity that GDA is not prevented from carrying out commercial activity, the only condition is that the profit so generated has to flow back into the organization towards fulfillment of its purposes for which it was established. Therefore, the service rendered to GDA with regard to construction of community center is taxable under CICS. 5.4 Further as per the clarification by the CBEC issued vide F. NO. 137/40/2009-CX. 4, dated 15.9.2009 "On a reference being received by the Board, two following issues were examined for a clear understanding of facts. The first is regarding leviability of service tax on construction of canals for Government projects. 1. As per section 65 (25b) of the Finance Act, 1994 "commercial or industrial construction service" 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, plaster....
X X X X Extracts X X X X
X X X X Extracts X X X X
....get together etc., from the public. Once they charge fees from the public, they can hardly be termed as charitable or philanthropic in nature. 5.5 Another contention of the appellant is that, if at all, they would be covered under the provision of 'works contract service' and not under 'CICS'. I observe that as per the Notification No. 32/2007-ST Dated 22/5/2007 regarding Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. (effective from 1.6.2007) - "3. (1) Notwithstanding anything contained in section 67 of the Act and rule 24 of the Service (Determination of Value) Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to two per cent. of the gross amount charged for the works contract. Explanation. For the purposes of this rule, gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Thus, to be eligible for the Notfn. No. 32/2007, the appellant should have fulfilled its conditions, which he did not do. Further the Notfn No. 32/2007-ST dt 22.5.2007 has been rescinded by the Notfn. No. 35/2012 dated 20.6.12 (effective from 1.7.12) Hence the appellant is appropriately covered under 'commercial or industrial construction service 5.6 In this context, I further observe that in the case of M/s AHLUWALIA CONTRACTS (INDIA) LTD VS COMMISSIONER OF SERVICE TAX, NEW DELHI-2015-TIOL-270-CESTAT-DEL it has been held by the Hon'ble Tribunal that- "Even the Municipal Corporation buildings are not outside the purview of commercial or industrial construction; indeed, many of its buildings are rented to various organisations. A claim has been made that the buildings made for the said hospitals is outside the purview of CICS on the ground that they were made for the charitable organisations. In this regard, there is no ambiguity that charitable organisation is not prevented from carrying out commercial activity; the only condition is that the profit so generated has to flow back into the organisation towards fulfillment of its charitable purposes.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stered themselves with the department. Thus the appellant had wilfully avoided in furnishing the details of services provided by them in order to evade payment of service tax, whereas services were provided right from 2008-09 itself. Malafide intent is clearly proved as the appellant failed to deposit the requisite tax with the department for several years. Had the Departmental Officers not visited the premises of the appellant, initiated an enquiry and unearthed the material facts, the matter would have been remained as it was before the issue of SCN. Therefore proviso to Section 73(1) is applicable for extended period of time. As such, penalty under relevant sections is also liable to be imposed. Further, for delayed payment of Service Tax, they are liable to pay interest at appropriate rate as per Section 75 of the said Act. 5.8 Appellant's contention is that since he deposited the service tax before the issuance of SCN, penalty should not be imposed upon him. In this regard even if it is assumed for arguments sake that the appellant was not aware about his liability of payment of service tax, in this context it is observed that he deposited the se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pe of levy of service tax under this taxable service. (ii) Under 'Erection, commissioning or installation services', the activities relevant to the instant issue are (a) the erection, commissioning and installation of plant, machinery, equipment or structures; and (b) the installation of electrical and electronic devices, including wiring or fitting there for. Thus, if an activity does not result in emergence of an erected, installed and commissioned plant, machinery, equipment or structure or does not result in installation of an electrical or electronic device (i.e. a machine or equipment that uses electricity to perform some other function) the same is outside the purview of this taxable service. (iii) 'Works Contract' incorporates the inclusions and exclusions of the aforementioned two taxable services (amongst others) and it is the nature of the contract (i.e. a contract wherein the transfer of property in goods involved is leviable to a tax as sale of goods) rather than the nature of activities undertaken, that distinguishes it from the previously stated taxable services. Thus, even in the case of 'works contract' if the nature of the activities is such that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as indicated in the table in Para 2.3 have been stated by the circular itself to be not taxable or taxable under the category other than that specified in the Show Cause Notice specifically. Further we note that appellant has vide their letter dated 23.11.2012 have specifically admitted in respect of leviability of service tax in respect of the erection, commissioning and installation services. They also discharged the service tax payable in respect of these services along with the interest. 4.5 The letter dated 23.11.2012 is reproduced below:- 4.6 Impugned order specifically takes note of the above and observes that the appellant do not dispute the leviability of service tax in respect of these services. Hon'ble Supreme Court has in case of Systems and Components Pvt. Ltd. [2004 (165) E.L.T. 136 (S.C.)] held as follows: 5. ....... The Tribunal has still strangely held that this by itself is not sufficient to show that they are specifically designed for the purpose of assembling the Chilling Plant. We are unable to understand this reasoning. Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... no ambiguity that charitable organisation is not prevented from carrying out commercial activity; the only condition is that the profit so generated has to flow back into the organisation towards fulfilment of its charitable purposes. Thus, merely because the hospitals were constructed for the charitable organisations do not make the hospitals per se non-commercial. Indeed these hospitals are not non-commercial and charge the patients for the medical services." Nothing has been placed on record by the Appellant to show that the community center was meant purely of the use of charitable purposes. On the contrary finding has been recorded that the community center was made available to public for their use against prescribed charges. We also note that Hon'ble Allahabad High Court has in case of Greater Noida Authority [2015 (40) S.T.R. 95 (All.)] held as follows: 31. As far as the circular dated 23rd August, 2007 issued by the Government of India, which has been so heavily relied upon by the appellant is concerned, we may record that under Clause 032.01, it has been provided that the Prasar Bharati Corporation (Doordarshan and All India Radio), which has been constituted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ge tank, LPG/CNG tank in terms of provisions of the relevant lows. Fee as prescribed is charged and the same is ultimately deposited into the Government Treasury. A doubt has arisen whether such activities provided by a sovereign/public authority required to be provided under a statute can be considered as 'provision of service' for the purpose of levy of service tax. The issue has been examined. The Board is of the view that the 2. activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provision of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/ public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat has to be preferred, where language is plain and is capable of determining a defined meaning. Strict interpretation of the provision is to be accorded to each case on hand. Purposive interpretation can be given only when there is an ambiguity in the statutory provision or it results in absurdity, which is so not found in the present case. 8.4 Now, so far as the submission on behalf of the respondent that in the event of ambiguity in a provision in a fiscal statute, a construction favourable to the assessee should be adopted is concerned, the said principle shall not be applicable to construction of an exemption notification, when it is clear and not ambiguous. Thus, it will be for the assessee to show that he comes within the purview of the notification. Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand its scope deviating from its language. Thus, there is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification." In view of the above we do not find any merits in the submissions made by the appellant in respect of the dema....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng and Installation Service' and 'Business Auxiliary Services'. However, assessee being unaware of the provisions of Finance Act, 1994 did not paid any service tax on provision of such taxable services. However, after becoming aware of its service tax liability on the services provided by it, assessee has voluntarily discharged its service tax liability along with interest under the aforesaid categories of taxable services. Further assessee has also availed the services of "Transport of Goods by Road Service" on which it has discharged its service tax liability under Reverse Charge Mechanism. In this respect, we would like to submit as under- Section 73(3) of Finance Act, 1994 reads as under- "(3) Where any service tax has not been levied or paid or has been short- levied or short-paid or erroneously refunded, the person chargeable with the' service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax , chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise officer before service of notice on him under sub-section (1) in respect of such....