TMI Blog2023 (12) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have confirmed the demand on the services under construction of complex service. Business of construction of civil structures either residential or commercial - demand dropped holding that the income declared to the income tax department has no co-relation with the service provided - HELD THAT:- The land in question was agricultural land. It was not converted into non-agricultural land. In some cases the agreements specifically provided that the site formation was meant for agricultural purposes. It, therefore, appears that the assessee had rendered these services on agricultural land for the real estate developers. The case of the assessee is that the intention of the client is irrelevant to taxability and as long as the service is rendered on agricultural land, it is non-taxable. On the other hand, according to the revenue, the demand on site formation service has been correctly confirmed in the impugned order because although the land was agricultural land during the relevant period, the nature of the contracts makes it abundantly clear that it was rendered to real estate developers for investment purpose which is undisputed. Whether the services rendered by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommerce or industry simply because some hostel fees is collected from students by the IITs. Similarly, Tehri Hydro Electric Development Corporation is national project meant for generating hydro electricity and supplying it - The buildings in hydro electric project cannot, therefore, also be considered as buildings primarily meant for commerce or industry - there are no error in the Commissioner s order dropping the demand with respect to the commerce or industrial construction service. Construction of complex service - demand to the extent the services were rendered to Uttar Pradesh Avas Vikas Yojna for construction of residential complexes for weaker sections dropped - HELD THAT:- If there are several buildings and each one fewer than 12 residential units and the total number of residential units in all the buildings together is more than 12, such complexes does not fall under section 65(91a). Therefore, no service tax can be levied on such complex - It is found that the Commissioner committed no error in dropping the demand on construction of complex services on the buildings which the appellant constructed for UP Avas Vikas Yojna. Demand of service tax on the declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the assessee is not contesting and has already paid the entire tax with interest. He upheld the demand on site formation service. 3. Aggrieved by the confirmation of demand on site formation service, the assessee filed Service Tax Appeal No. 55788/2014. Revenue filed Service Tax Appeal No. 55922/2014 assailing the dropping of demand under the head Commercial and Industrial Construction service for the services rendered to educational institutes and to office of Tehri Corporation and on construction of complex services . Revenue is also aggrieved by dropping of demand of service tax based on declaration to the income Tax department survey . There is no appeal by either side with respect to management, maintenance and repair services. 4. We have heard learned counsel for the assessee and learned departmental representative appearing for the Revenue and perused the records. 5. The assessee is registered with the service tax department under the categories of real estate agent and commercial or industrial construction service. Receiving information that the assessee had provided site formation and clearance service , and excavation and earth moving and demol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited by the assessee should not be appropriated under Section 75 of the Act ibid, (ix) Penalty under Section 76 of the Act ibid for their failure to pay the Service Tax during the relevant period should not be imposed upon them, in accordance with the provision of Section 68 of the Act ibid read with Rule 6 of Service Tax Rules, 1994; (x) Penalty under Section 77 of the Act ibid should not be imposed upon them for contravening the Section 70 of the Act ibid read with Rule 7 of the Service Tax Rules, 1994; and (xi) Penalty under Section 78 of the Finance Act, 1994 should not be imposed upon them for deliberately suppressing the facts and contravening the provisions of the Law with willful intention to evade payment of Service Tax. 6. The assessee contested that demand which was partly confirmed and partly dropped by the Commissioner through the impugned order, the operative part of which service is as follows; ORDER (i) I order for recovery of service tax amounting to Rs. 6,11,22,008.00 (Rupees Six Crores Eleven Lakhs Twenty Two Thousand Eight Only) under the proviso to the Section 73(1) read with Section 68 of the said Act ibid and Rule 6 of Services tax rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not include such services provided in relation to agriculture , irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies; 8. Learned counsel for the assessee submitted as follows: (i) The demand has confirmed on site formation service as defined under section 65 (97a) of the Finance Act and taxable under section 65(105) (zzza) incorrectly because the site formation service rendered in relation to agriculture is not taxable and is beyond the scope of the definition of taxable service. (ii) The Commissioner did not agree with the submissions by the appellant that the service was rendered in relation to agriculture holding that it was rendered to the client for investment purpose. Even if it is accepted to be true, the investment purpose was on the owner of the land is irrelevant to decide if the service is taxable under section 65 (97a) read with section 65 (105) (zzza). (iii) The submission of the assessee, though recorded in paragraph 47.01 to 47.10 of the impugned order, was not considered. All the evidence put forth by the assessee shows that the work was for agriculture purposes and an agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service on the services rendered by the assessee by way of constructing three buildings of Aligarh Muslim University, construction of boys hostel and flats at IIT Roorkee and Tehri Hydro Development Corporation. The demand was dropped by the adjudicating authority relying on CBEC Circular No. 80/10/2004-ST dated 17.09.2004 which was withdrawn by Circular No. 96/7/2007-ST dated 23/08/2007. Educational institutes, per se, were not excluded from the ambit of definition of Commercial or instruction construction service. 11. The definition of commercial and industrial construction under section 65 (25b) is reproduced below: 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 restorat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder construction of complex service. 15. The assessee had declared an amount of Rs. 10 crores during income tax survey and it was alleged in the SCN that since the assessee was engaged in business of construction of civil structures either residential or commercial the aforesaid income declared was earned by providing service of construction only. The adjudicating authority dropped the demand holding that the income declared to the income tax department has no co-relation with the service provided. The adjudicating authority erred in not appreciating that in the declaration before the income tax authorities, the director of the assessee Shri Jameer A Khan, said that the amount was collected from various investors in March, 2007 to launch real estate projects. This statement was not considered as correct by the Revenue as the balance sheet of the notice for the relevant period revealed that they were only into construction business and were not working as developers. For these reasons the amount collected from various investors for the projects to be launched by the assessee are squarely covered as amounts collected for services to be provided under section 65 (105) of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveloping into real estate although such development can take place only after the land was is got converted into non-agricultural land by the land revenue authorities. Unsurprisingly, the contracts do not mention that the site formation must be done by the appellant for non-agricultural purposes because non-agricultural activities could not have been taken up on the land before it was converted to non-agricultural land. Seeing the contracts as a whole, it is evident that the purpose of site formation was for the builder to develop it into real estate and it was not for agricultural purposes. Learned counsel for the appellant relied on the order of the Tribunal of co-ordinate bench in the case of ASSOTECH Limited vs. Commissioner of Central Excise Service Tax, Meerut-I [2020 (43) GSTL 198 (Tri-All) ] in which it was held that the services rendered by M/s ASSOTECH to M/s Aero Intra for supply of mud and spreading and dumping of earth on agricultural land was not chargeable to service tax although after completion of this work, M/s Aero Infra Limited got the land used changed from agricultural use to construction of residential complexes. Revenue s appeal against this order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imarily for commerce or industry. Similarly universities, as a matter of course, provide consultancy services as a part of their extension programmes and do collect some consultancy fee when such services are provided. That does not make them organizations primarily engaged in commerce or industry nor can a building which is used for providing such consultancies be considered as a building primarily for commerce or industry. 22. We also do not agree with the contention of the Revenue that the hostels in IIT constructed by the assessee should be considered as buildings primarily for commerce or industry simply because some hostel fees is collected from students by the IITs. Similarly, Tehri Hydro Electric Development Corporation is national project meant for generating hydro electricity and supplying it. Needless to say when the electricity is generated the generator company sells it to the transmission company who, in turn, sells to it to the distributor company. That by itself does not make hydro electric projects buildings primarily for commerce or industry. The buildings in hydro electric project cannot, therefore, also be considered as buildings primarily meant for commerce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) residential complex means any complex comprising of (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. Explanation- For the removal of doubts, it is hereby declared that for the purpose of this clause,- (a) personal use includes permitting the complex for use as residence by another person or rent or without consideration; (b) residential unit means a single house or a single apartment intended for use as a place of residence. 26. The question as to whether the residential complex under section 65 (91a) includes such complexes where each building has fewer than 12 units but all the buildings t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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