TMI Blog2013 (11) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken in relation to a particular floor or unit of the building, it would certainly amount to activity being undertaken in relation to a building as envisaged in clauses (c) and (d) of Section 65 (25b) of the Finance Act, 1994 - In the definition of taxable service, under section 65 (105) (zzq), the expression used is "in relation to" has been construed to be of widest amplitude – Relying upon Doypack Systems Ltd. Vs. UOI [1988 (2) TMI 61 - SUPREME COURT OF INDIA ]. Difference of opinion - On the issue of classification and taxability, both the members are in agreement - decided against the assessee. - But on the issue of raising demand invoking extended period of limitation and levy of penalty, there is no consent between the two members - matter referred to larger bench on the issue of period of limitation and penalty. - ST/251/12 - Order Nos. M/1210/13/CSTB/C-I, A/10/14/CSTB/C-I, M/05/14/CSTB/C-I - Dated:- 20-8-2013 - P R Chandrasekharan And Anil Choudhary, JJ. For the Appellant : Shri Bharat Raichandani, Adv. For the Respondent : Shri P N Das, Comm. (AR) PER : P R Chandrasekharan The appeal is directed against Order-in-Original No.20/ST/SB/2011-12 pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve discharged VAT/Sales tax liability. The appellants were under the bonafide belief that the services of carpentry, masonry and interior decoration work were not liable to service tax. The notice was adjudicated and the adjudicating authority held that the activities undertaken by the appellant is classifiable under "Commercial or Industrial Construction Service" and he allowed abatement, towards the value of goods supplied in terms of Notification NO. 15/2004-ST dated 10/09/2004 and 01/06-ST dated 01/03/2006 and accordingly confirmed a demand of service tax on 33% of the gross value charged. Thus, he confirmed a service tax demand of Rs. 1,61,48,983/- along with interest thereon and also imposed penalties on the appellant under Section 76 78 of the Finance Act, 1994 and late fee at the rate specified in Rule 7C of the Service Tax Rules, 1994. Aggrieved by the said order, the appellant is before us. 3. The Ld. Counsel for the appellant made the following submissions: 3.1 As per Section 65 (25b) of the Finance Act, 1994 "Commercial or Industrial Construction Service" is defined as under: "Commercial or industrial construction" means - (a) construction of a new b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a commercial concern in relation to construction, repairs, alteration or restoration of such buildings, civil structures or parts thereof which are used, occupied or engaged for the purposes of commerce and industry are covered under this new levy. In this case the service is essentially provided to a person who gets such constructions etc. done, by a building or civil contractor. Estate builders who construct buildings/ civil structures for themselves (for their own 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s "building or civil structure" and "or part thereof". It cannot be assumed that the words used are superfluous. He relies on the decision of Devidayal Electronics Wires Ltd. - 1984 (16) ELT 30 (Bom) and CCE Vs. Himalayan co-Op Milk Product Union Ltd.- 2000 (122) EL T 327 (SC) in support of the above contention. It is further argued that there is a difference between a building and a part of a building and relies on the decision of the hon'ble Supreme Court in the case of Mongibhai Hariram vs. State of Maharashtra - 1996 (2 (SCR) 322 wherein the Hon'ble High Court was concerned with the interpretation of the sub-clause (3) of Section 4 of the Bombay Land Requisition Act, 1948. The said provisions read as - "building or part of a building let or intended to be let separately" and it was held that phrase "intended to be let separately" will apply only to part of the building and not with respect to the building. Reliance is also placed on the decision in the case of Perfect machine Tools Co. Pvt. Ltd. -1991 (56) ELT 547. In that case, a question arose with regard to the interpretation of notification No. 49/78 dared 01/03/1978. The importer in that case claimed the benefit of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under "Commercial or Industrial construction Service" as held by this tribunal in the case of Spandrel Vs. CCE, Hyderabad/Kochi - 2010 (20) STR 129 (Tri-Bang) wherein it was held that providing of false ceilings, partitions, flooring, modular system, painting, carpeting, wall paneling, etc., would be covered under "Commercial or Industrial Construction Services" with effect from 16/06/2005. With regard to the issue of limitation, it is urged that the show-cause notice issued to the appellant earlier pertained to demand of excise duty and the notices were issued prior to the introduction of service tax on "Commercial or Industrial Construction Service" and therefore, the said notice has no relevance to the facts of the present case. The demand in the present case is with respect to the service tax liability and has nothing to do with the manufacture of excisable goods. In view of the fact that the appellant did not obtain any service tax registration nor did he comply with any of the statutory provisions relating to service tax, extended period of time has been rightly invoked and therefore, the demand ought to be sustained. With regard to the contention of the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of a new building which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorised by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer; 5.1 The activity undertaken by the appellant falls under both clauses (c) and (d) of Section 65 (25b). Both these clauses do not specify that they should be undertaken in respect of a new building only and even if they are undertaken in relation to an old building, the provisions of these sections would apply. In fact repair, alteration, renovation or restoration or similar services would be mostly applicable to old buildings only. Therefore, the argument of the appellant that since the activities have been undertaken in respect of an old building and not a new building, service tax liability is not attracted would be ignoring the explicit provisions of law. It would amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , consultancy and technical assistance or planning work and designing. The adjudicating authority in this case has held that the words appearing in the definition would encompass the execution of the work which has been done by interior decoration. We are not impressed by the said findings or the observations made by the lower authority for the simple reason that the definition of 'interior decorator service' clearly envisages advice, consultancy and technical assistance and also planning and design and nowhere includes execution of work to be done as would fall under the category of 'interior decorator service'. 8. On the other hand, we find that the amendments which were brought in the Finance Act, 2005 with effect from 16.6.2005 to the services "Commercial or Industrial Construction" under Section 25(b) of the Finance Act, read as under:- "25(b) "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) competition and finishing services such as glazing, plastering, painting, floor and wall filling, wall co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the said decision would squarely apply. 5.4 As regards the argument whether the activity would attract tax liability only if performed qua the whole building and not in respect of a part of the building, this argument also is not convincing from a common sense point of view. As per Oxford English Dictionary ' "building means that which is build; a structure, edifice'. As per Black's Law dictionary, (5 th Edition) the meaning of the word 'building' is given as follows- "A structure or edifice enclosing a space within its walls, and usually, but not necessarily, covered with a roof. In Bourvier's Law Dictionary, the meaning of 'building' is given as "an edifice, erected by art, and fixed upon or over the soil, composed of brick, marble, wood or other proper substance, connected together, and designed for use in the position in which it is so fixed." Therefore, any structure or edifice enclosing a space within its walls would come within the scope of building and therefore even a particular floor or unit of a building which encloses a space within its walls and covered with roof would come within the scope of term "building". In Kalpakam Amma vs. Muthuram Iyer Muthurkr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a direct significance as well as an indirect significance depending on the context." Thus the said expression is wide enough to cover the activity undertaken in respect of part of the building also and we hold accordingly. 5.5 The Ld. Counsel for the appellant has relied on a number of decisions in support of his contention that a part of the building cannot be construed as a building. We have perused these decisions and we find that the facts involved in these decisions are substantially different and distinguishable. Most of these decisions pertain to machinery/equipment and their parts either under the Central Excise or Customs Tariff. In Customs and Central Excise tariff, machinery and parts have separate entries for classification. Therefore, in these decisions, it has been held that parts of machinery has an independent and separate identity. In the Monghibhai Hariram case, the Bombay High Court did not have any occasion to examine whether part of the building also would be a building or not. Therefore, the ratio of these decisions would not have application to the facts of the present case. 5.6 The next issue for consideration is whether the demand is time barred or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposable for default in payment of service tax and mens rea is not required to be proved and mere contravention of statutory provisions would suffice. The decision of the Apex Court in the case of Gujarat Travancore Agency vs. CIT [ 1989 AIR 1767] and Chairman SEBI Vs. Sriram Mutual Fund refers. The Hon'ble High Court of Kerala in the case of Krishna Poduval - 2006 (1) STR 185 (Ker) held that penalties under both Sections 76 and 78 can be imposed as the incidence of imposition of penalty are distinct and separate under the two provisions and even if offences are committed in the course of same transaction or arise about of the same act, penalty would be imposable. Thus for the period prior to 10-5-1008, the appellant would be liable to penalty both under section 78 would apply. As regards the late fee imposed under Section 7C of the Service Tax Rules, 1994, the same is clearly attached inasmuch as the appellant had not filed/furnished any returns during the impugned period. 5.9 As regards the plea of revenue neutrality claimed by the appellant, we do not find any merit in this argument. The principles of revenue neutrality, if at all, would apply only if the payment of tax and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s disposed of in the above terms. (Pronounced in the court on ..) PER : Shri Anil Choudhary, Member (Judicial) 7. I had the benefit of going through the order passed by learned brother Shri P.R. Chandrasekharan, Member (Technical). Although I agree as regards the classification of the activity of the appellant is taxable under the category 'Commercial or Industrial Construction Service', but I differ as regards the aspect of limitation and penalty. 7.1 That, it is observed that the Revenue was having the knowledge of the activity of the appellant in view of the fact that a show-cause notice was issued on 21.3.2002 for the period 1997-98 alleging that the appellant is engaged in the manufacture of furniture etc. and failed to pay excise duty on the excisable goods. After detailed scrutiny including recording of several statement and examination of the records, the show-cause notice was adjudicated vide order dated 25.2.2008 confirming excise duty payable by the appellant for the period 1997-98 along with penalty under Section 11AC for same set of activity. It is brought to notice that another show-cause notice has been issued on 4.7.2007 for levy of excise duty for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercial or Industrial Construction Services' ( the relevant para of the order is quoted in para 5.2 above). 7.5 That, it is also noteworthy to mention that illustrative list of activities is mentioned in clause (c) and the Explanatory Circular indicates that the activity relating to new construction only. Further clause (d) although it mention repairs, installation/renovation but does not mention in relation to 'part of a building or unit of building'. 7.6 That, it is further observed that the Section 65(30a) was also introduced simultaneously in the Finance Act, 1994 for levy of charge of construction or new residential complex or a part thereof and nowhere mentions in clause (c) of Section 65 (30a) for repair, alteration or renovation shall be chargeable in respect of part or unit thereof. 7.7 That from the aforementioned observations, it is seen that the issue involved in the present case is one of interpretation of statutory provisions wherein the department has also tried to classify the same activity under 'Interior Decorator Services', which was turned down by this Tribunal. Thus, it can be said that the proprietor of the appellant firm bonafidely had the belief that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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