CESTAT | Whether the service tax can be demanded on the construction of houses for rehabilitation of poor people under JNNURM? Tribunal answers
Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Anil Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member) allowed an appeal which was filed with the main issue of as to whether the service tax have been rightly demanded on the appellant who had constructed houses for rehabilitation of poor people under JNNURM.
The appellant was engaged in providing works contract services and was registered with the Department, in the month of February, 2014 the Department received some financial data from third party source wherein the name of the appellant appeared thereafter he was asked to submit documents for verification of discharge of service tax liability which submitted timely. He also submitted contract wise detail of all the contract works done during the last five financial years on the request of the Range Superintend.
It appeared to the Revenue that appellant had wrongly availed exemption in respect of Jawaharlal Nehru Urban Renewal Mission (JNNURM) during the Financial year 2009-10 to 2010-11 as the construction services provided under JNNURM were exempted vide Notification No. 28/2010–ST which came into force on 01 July, 2010. It further, appeared that appellant had wrongly claimed exemption in respect of construction works done for Krishi Utpadan Mandi Parishad (for short Mandi Parishad) during the financial year 2013-14 as under Serial No.12(a) of Notification No.25/2012-ST exemption is available for construction services provided to a government authority which is meant predominantly for use other than commercial/industrial. It further appeared that appellant had not discharged service tax on construction services provided to M/s Uncle Builders during the financial year 2009-10 & 2010-11.
The issues framed by the commissioner were:
- Whether the exemption from payment of Service Tax in respect of services provided by the notice to Agra Development Authority (in short ‘ADA’) under Jawaharlal Nehru Renewal Mission (in short ‘JNNURM’) for construction of houses for weaker section of society would be available for the period from 2009-10 to 2010-11(up to 30.06.2010) before issuance of Notification No. 28/2010-ST dated 22.06.2010 (w.e.f. 01.07.2018).
- Whether the exemption from payment of Service Tax in respect of services provided by the noticee to Rajya Krishi Utpadan Mandi Parishad (in short ‘Mandi Parishad’) during 2013-14, for construction work under Works Contract would be available, under Sl. No. 12(a) of Notification No. 25/2012-ST dated 20.06.2012.
- Taxability of services provided to M/s Uncle Builders during 2009-10 & 2010-11.
- Issue relating to demand of interest and penal action against Noticee.
Counsel for the appellant assailed the findings of the Commissioner stated that for the advance amount received before July, 2010 for construction of residential houses under JNNURM & ‘Rajiv Awaas Yojana’, the work was done after July, 2010 and exempted as per Notification No. 30/2010 dated 28 June, 2010. Further, for the work relating to JNNURM have been executed for the Uttar Pradesh Government, which is providing shelter and home to the poor people at nominal rental basis and thus falls under the definition of construction for personal use of the Government or government authority.
As regards the second issue relating tax liability for construction for Mandi Parishad, Commissioner had observed that these Mandi Parishad were formed under the Act of State Legislature ‘Uttar Pradesh Krishi Utpadan Mandi Adhiniyam 1964’, but not for carrying out any municipal function which are provided under Article 243W of the Constitution of India. Counsel for the appellant urged that admittedly appellant had constructed toilets, roads, drainage, outer sewage, underground water storage tank reservoir, drinking water supply, S.T.P. (Sewage Treatment Plant)Labour shed etc. for the Mandi Samiti and it was a statutory body created under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964. Thus as per Entry No.12 & 13 of Mega Exemption Notification No.25/2012, the appellant had rightly claimed exemption for providing construction services to the Statutory Authority, and the same was not commercial in nature as has been clarified by the Board vide Circular dated 18 December, 2006.
The Tribunal was of the view that various constructions works carried out for Mandi Parishad was not liable to service tax and were exempted in view of the Education Guide dated 20 June, 2012 by the Board, read with Circular No.89/7/2006 dated 18 December, 2006, read with the Mega Exemption Notification No.25/2012-ST. The Tribunal further added that as regards the third issue i.e. tax liability for work done for Uncle Builders (from 2009-10 to 2010-11), admittedly the appellant had paid tax on 04 June, 2006 along with interest before the issuance of SCN (issued on 31 March, 2016).
The Tribunal held that extended period of limitation is not available to Revenue in these facts and circumstances. Further, appellant have maintained books of account and filed regular returns. It further found that Revenue have erred in adopting Form 26AS for calculating tax liability, which is patently wrong, as Form 26AS is not a prescribed document in the service tax rules for ascertaining the gross turnover of the assessee. The appeal was allowed with consequential benefits.[Ganpati Mega Builders (INDIA) (P) Ltd. v. Commr., Customs, CE & ST, Service Tax Appeal No.70671 of 2016, decided on 05-08-2021]
Suchita Shukla, Editorial Assistant has reported this brief.
Advocates before the Tribunal:
Advocate for the Appellant: Ms Rinki Arora & Shri Aalok Arora
Authorized Representative for the Respondent: Shri Rajeev Ranjan