Shivprasad Construction vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No.ST/287/09 & ST/322/09

(Arising out of Order-in-Appeal No.PII/173/2009 dated 21/08/2009 passed by Commissioner of Central Excise (Appeals), Pune)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

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

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Shivprasad Construction Appellant Vs. Commissioner of Central Excise, Respondent Kolhapur

Commissioner of Central Excise, Appellant Kolhapur Vs. Shivprasad Construction Respondent

Appearance: Shri.V.B.Gaikwad, Advocate for appellant Shri.S.V.Nair, Supdt. (AR), for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical)

Date of Hearing : 13/03/2015 Date of Decision : 13/03/2015

ORDER NO

Per: M.V. Ravindran

1. These appeals are directed against Order-in-Appeal No.PII/173/2009 dated 21/08/2009 passed by Commissioner of Central Excise (Appeals), Pune.

2. Heard both the sides and perused the records.

3. The issue involved in this case is that the appellant was rendering services of Commercial or Industrial Constructions Services. The appellant had undertaken various constructions for schools and colleges as well as for sugar factories for their clients. On scrutiny of the records it was noticed that the appellant was liable to discharge the service tax liability on the amount received. The adjudicating authority held against the appellant. The first appellate authority after following due process of law held that the construction activity undertaken by the appellant for construction of educational institutes is not taxable, while in the case of construction activities undertaken by the appellant for factories are liable to service tax. On coming to such a conclusion he set aside that portion of the impugned order, which confirmed the demand on the construction of educational institutions and the amount received by 10/09/2004 and upheld the demands for the service tax liability along with interest and imposed penalties on the construction activities of sugar factories. Revenue as well as the assessee are in appeal before us.

4. Learned Counsel for the appellant/assessee submits that they have already discharged the service tax liability of the construction activities undertaken by them on sugar factories. It is his submission that they had a bonafide belief that such activity would not fall under the category of service tax. On a specific query from the Bench he confirmed that they have paid interest also and produced the copy of the challan.

5. Learned DR would submit that the appellant need not be granted any relief on penalty as the appellant had not discharge service tax liability despite having knowledge that he required to do so. On departmental appeal, it is his contention that the educational institutions are commercial concerns. It is his submission that the balance sheet of the assessee shows profits which would mean that they are running commercial business. Hence, the order of the first appellate authority to that extent needs to be set aside and demands be confirmed on the appellant assessee.

6. We have given due consideration to the submissions made by both the sides and perused the records.

7. As regards the appeal filed by the department, we find that the first appellate authority as well as the adjudicating authority have clearly recorded that construction activity undertaken by the appellant/assessee was in respect of various educational institutes. The definition of commercial and industrial construction services specifically excludes from service tax, the construction activity, which are not commercial or industrial in nature. We find that an identical issue, this bench had taken a view in the case of Anand Construction Vs. CCE  2013 (32) STR 451 (Tri) took a view has that construction of hostel or the residence of students studying in medical institute does not get covered under the category of commercial or industrial construction service. The same view has been taken by the Principal Bench of this Tribunal in the case of Singhania Enterprises Vs. CCE, Raipur  2015 (37) STR 551 (Tri-Del).

8. In view of the fact that construction activity undertaken by the appellant/assessee in this case is for educational institution; following the ratio laid down by the Tribunals decision, we hold that revenues appeal is devoid of merits and is rejected.

9. As regards the appeal filed by the assessee, we find that the impugned order confirming the demand along with interest is correct, as the construction activity undertaken of sugar factories will fall under the service tax not under the category of commercial or industrial construction service.

10. Since the appellant has already paid the service tax liability and discharged the interest liability and could have entertained a bonafide belief that such activity undertaken by him may not have any service tax implication, we find that it is a fit case for invoking the provisions of Section 80 and setting aside the penalties imposed on the appellants. We invoke the provisions of Section 80 and set aside penalties imposed on the appellants.

11. Both the appeals are disposed of as indicated herein above.

(Dictated in Court)

(P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial)

pj

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