M/S. India Guniting Corporation vs Service Tax, Delhi

[Arising out of Order-in-original no. 37/GB/2013 dated 20/3/2013 passed by the Commissioner Service Tax, Delhi]

For Approval and Signature:

Honble Mr. Justice G. Raghuram, President

Honble Shri C.J., Mathew, Member (Technical)

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

M/s. India Guniting Corporation Appellant

Vs.

The Commissioner

Service Tax, Delhi Respondent

Appearance: Shri Anil Khanna, Advocate for the appellant

Shri Satyavir Singh, Chief Commissioner (AR) for the respondent.

Coram: Honble Mr. Justice G. Raghuram, President

Honble Shri C.J., Mathew, Member (Technical)

Final Order No. 53331/2015

Per: C.J. Mathew

The stay application ST/stay/58560/2013 having come up for hearing, learned Counsel for the appellant submitted a list of 20 contracts executed by them for the period from 2003 to 2009 with details relating to payment as well as the nature of the service rendered by them. This was in compliance with our interim order no. 170/2015 dated 21st September, 2015.

2. The main contention of the appellant in seeking stay of recovery of demand confirmed in order-in-original no. 37/GB/2013 dated 20/3/2013 of Commissioner of Service Tax New Delhi for an amount of Rs. 5,52,30,117/- with interest thereon and penalties under section 77 and 78 of Finance Act, 1994 is that most of these projects covered in the demand were either not liable the tax being works executed for Government or that these were works contract and hence not liable to tax during the relevant period. In view of the details submitted by the appellant and issues related to these details, we deem it appropriate to take up the appeals themselves for final disposal waiving requirement of pre-deposit.

3. To recount the facts briefly, the appellant, M/s. India Guniting Corporation was investigated by the Director General of Central Excise Intelligence for non-payment of service tax on commercial or industrial construction, construction of complex service and maintenance of road services. The original authority found that these projects were liable to tax under the respective entries in section 65 of Finance Act, 1994.

2. According to the original authority, construction works for bodies such as CSIR, NCDS, Delhi Jal Board and PSUs were not exempt from the ambit of tax under construction of complex service. Likewise, it was held that work relating to Government-owned buildings which were intended to be leased out or were being leased out on commercial terms were also not exempt and that work relating to schools and staff quarters as well as road maintenance were also liable to tax.

3. Heard both the sides.

4. We find that in consequence of the decision of the Honble Supreme Court in the case of Commissioner of Central Excise and Customs, Kerala Vs. Larsen & Toubro Ltd. [2015 (39) S.T.R. 913 (S.C)] on taxability of works contract prior 1st June 2007 which the original authority did not have as a guide when adjudicating the show cause notices, each of the contracts undertaken by the appellant would need to be examined for taxability itself. We also find that some of the buildings for which works were undertaken by the appellant are undoubtedly rented out but these can hardly be categorized as being put to commercial lease as to bring it within the ambit of the definition of commercial or industrial construction in section 65(25b) of Finance Act, 1994. We also observe that in a few of the contracts executed for the Delhi Government and municipal bodies, consideration was yet to be received by the appellant.

5. Considering the factual matrix and the decision of the Honble Supreme Court supra, we are of the opinion that the original authority would need to have a fresh look at the claims made by the appellant. We, therefore, direct the original authority to scrutinize the nature of each of the works covered in the show cause notice for excluding demand on works contracts prior to 1st June 2007 and to re-examine whether any of the repairs and alteration contracts relate to buildings that are being rented out to public offices for exclusion from demand. The appeal is, thereby, allowed by way of remand to the original authority with the impugned order set aside.

[Operative portion of the order has already been pronounced in the open court.]

(Justice G Raghuram)

President

(C.J.Mathew)

Member (Technical)

Ritu

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