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2019 (1) TMI 1441 - AT - Service TaxWorks Contract - Construction services - works of conservation, repair, renovation and restoration work for Archaeology and Museums Department, Government of Rajasthan and various other Government Agencies/ Departments - Conservation and restoration work done for Ghat ki Guni, Jaipur - Construction of Roads, culvert and drain in the stone park - Construction of individual houses constructed for Rajasthan Housing Board - Construction of quarters at DCCPP, Dholpur - Construction of quarters for officers of RRVUNL - Construction Milk Chilling unit for dairy under scheme of Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture - Sub- contractor work for GEA Energy and others - cum-tax benefit - imposition of penalties. Commercial and Industrial Construction Services - Conservation and restoration work done for Ghat ki Guni, Jaipur - Construction of Roads, culvert and drain in the stone park - Held that:- The later work (Ghat ki Guni) is held taxable for the reason that it does not fall within the definition of building but the perusal of definition under Section 65(25B) makes it clear that the construction meant not only for building but for any other civil structure or a part thereof. There is no denial on the part of the Department for Ghat ki Guni to be at least a civil structure which otherwise is apparent from the photographs also as are placed on record by the appellant. Resultantly, confirmation of the tax liability as far as the conservation and restoration of Ghat ki Guni is not sustainable. With respect to the several work orders/ contracts executed with respect to construction, widening, renovation or maintenance of the road it is observed from the above definition of Section 65(25B) itself that the same are excluded from the taxability thereof. Though w.e.f. 01.07.2012 the word “road for use by general public” has been incorporated in the aforesaid provision but to our opinion the said insertion is not affecting the execution of the work contracts/ orders executed by the appellant qua various roads - Perusal clarifies that roads/ drains/ pipelines as executed by the appellant are the roads for use by general public which fall under exclusion part of the definition of Commercial and Industrial Construction - The findings of the Commissioner confirming tax liability for conservation and restoration work done for construction of roads, culverts and drain in the Stone Park are therefore hereby set aside. Construction of individual houses constructed for Rajasthan Housing Board - Construction of quarters at DCCPP, Dholpur - Construction of quarters for officers of RRVUNL - Held that:- The complex which is constructed with an intention for personal use as residence by a person who is directly engaging any other person for designing / planning of layout and the construction of such complex out of the ambit of such construction and thus from taxability - reliance placed in the case of C.C.E., Aurangabad Vs. Mall Enterprises [2015 (11) TMI 333 - CESTAT MUMBAI] wherein it was held that not only residential complex is designed or laid out by another person are excluded from the definition but also the ones intended for personal use of such person i.e. the owner of the complex - In the present case, the quarters/ residential complexes were got constructed by the appellant for three different Departments of Government of Rajasthan for being used as accommodation for their own employees, the same amounts to ‘personal use’. The confirmation of demand qua these services by the Commissioner is therefore not sustainable, accordingly is set aside. Construction Milk Chilling unit for dairy under scheme of Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture - Held that:- Though the milk chilling plant was run by Rajasthan State Government but the fact remains is that the plant was selling milk on commercial basis against the profit. In view of said apparent fact, it cannot be held that the State Government was discharging some sovereign function and as such exemption from taxability is not available because irrespective of authority been owned by Government if the work/ activity of this authority is intended for business or commerce, it becomes taxable - demand rightly confirmed. Sub- contractor work for GEA Energy and others - Held that:- From the record i.e. scrutiny of contract it is perused that cement and steel had been supplied by M/s GEA Energy Systems only under all the work Orders. In such circumstances, it cannot be held that the liability of appellant as sub contractor is same as the liability of the main contractor which is mentioned to have been discharged for the entire contract for the purpose. In the given circumstances, for the impugned contract, the appellant as sub contractor cannot be held to have stepped into the shoes of the main contractor. Resultantly, any discharge of tax liability by the main contractor cannot be held as the discharge of the liability of sub contractor. The fact that services provided by such sub contractor are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by a sub contractor. Services provided by sub contractor are in the nature of input services. Service tax is therefore leviable on any taxable service provided whether or not the services are provided by a person in his capacity as a sub contractor or whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provider. Such proposition finds support from the basic rule of cenvat credit and service of a sub contractor may be input service provided for a contractor if there is integrity between the services. Thus tax paid by a sub contactor may not be denied to be set off against the ultimate service tax liability of the contracts if the contractor is made liable to service tax for the same transaction, though the exchequer cannot be enriched on account of double taxation - demand upheld. Cum-tax benefit - Held that:- The appellant herein is engaged in constructing residential complexes and commercial or industrial complexes and has been held eligible for the benefit of abetment vide Notification No. 01/2006 - in view of provision of Section 67(2) of Finance Act, 1994 cum-tax benefit should be made available to the appellant. Imposition of penalties - Held that:- Where most of the findings of the adjudicating authority against the appellant have been set aside, it stands clarified that there was no deliberate defiance of legal provision nor any non compliance thereof as has been noticed qua the appellant and as is otherwise alleged in the SCN - The appellant is rather observed to be under bonafide belief of being entitled under the abetment Notification and of not been liable being a sub contractor and also about the work to have been excluded being not for commerce and thus is not liable to pay the tax. In the given circumstances, when there is no malafide intent proved or is not even apparent to evade tax, the penalties under Section 76 and 78 are not at all sustainable - Commissioner has been wrong while confirming the proposed demands alongwith interest and the penalties except for the demand confirmed qua construction services for milk chilling plant and for the demand qua work contracts of construction as sub contractor where the construction material has been provided by the main contractor - The interest and penalties stand proportionately reduced. Appeal allowed in part.
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