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2015 (2) TMI 971 - CESTAT NEW DELHIDenial of exemption from service tax - Whether sub-contractors engaged for building residential complexes for Delhi Police could be considered for receiving services on behalf Govt. of India and no service tax liability could be fastened on them - Held that:- Commissioner (Appeals) has distinguished that Govt. of India enterprise cannot be equated with any Govt. Department which were on behalf of Government of India or President of India. He also come to conclusion that appellant had entered into contract of service with M/s HPL and referred the construction service with M/s HPL and not to Delhi Police rightly and being a sub-contractor they were liable to pay the service tax. - it is seen that major beneficiary of contractor or residential complex is the Delhi Police (Govt. of India) and M/s HPL is only the contractor executing agency who have provided the service to the Delhi Police through sub- contractor. They have further got the work done from the appellants who were connected as a sub-contractor. I find that intention of the Government is not to levy service tax on the service received by the Government of India through contractor or subcontractor. I have also examined the exemption. If sub-contractor is directed to pay the service tax which have ultimately to be utilizes by the Delhi Police (Govt. of India) only on technicality that a sub-contractor is involved in the construction of building, will ipso facto take away the exemption granted to the Government of India. Further use of housing complex for non-commercial use and will not come under the service leviable to service tax. In this regard definition of the service of commercial and industrial construction service became taxable as per the Section 65 (25b) in 2004. However, the definition and scope of service was changed by Finance Act, 2005 and revised definition is reproduced for appreciation. Building has been got constructed by the Government of India for their own use as residential complexes for Delhi Police, it does not result in construction for commercial purposes further construction by Government for non-commercial purpose was not taxable, however construction by the Government for commercial activities such as civil body construction for shops or commercial complexes laying in the nature of commercial activity were taxable. - merely because the construction has been get done from the contractor/sub-contractor, it will not change the nature or the activity from non-commercial to commercial. Once it comes out that Government has undertaken a project which is non-commercial in nature and not taxable, service received on this account by the Government would not come under the taxability. - even subcontractor cannot be directed to pay service tax when the taxability of the construction is non commercial in nature being not taxable. - Decided in favour of assessee.
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