ST - Construction of retention wall on bank of Sabarmati river can be considered in a broad sense as renovating or restoring of water bodies - activity falls under exclusion clause of "site formation and clearance, excavation and earth moving and demolition service" - No ST chargeable: CESTAT
By TIOL News Service
MUMBAI, JULY 30, 2014: THE brief facts are that the appellants undertook construction of diaphragm wall with reinforced anchor slab and special fill for Guide Bund, Retention Wall, Guide Wall on the bank of Sabarmati River as per the agreement with M/s. Sabarmati River Front Development Corporation Limited.
It is the case of the Revenue that the appellant(s) have provided "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" and hence they are liable to pay the service tax.
In the impugned orders the cases have been adjudicated and the demands have been confirmed.Penalties have also been imposed on the appellants.
We reported the Stay orders passed by the CESTAT thus -
Re-charging of ground water levels, reduce problems arising out of floods in river, provide recreational facilities for citizens - service falling in exclusion clause u/s 65(97a) as it is in relation to irrigation, repairing, or restoring of water sources - Prima facie case for waiver of pre-deposit: CESTAT [See 2011-TIOL-117-CESTAT-MUM]
ST - Site Formation and Clearance, Excavation and Earth moving Demolition Services - Project is perceived by Sabarmati River Front Development Corporation not for purpose of restoring of water resources but for creation of promenades, recreation parks and gardens - Tribunal orders pre-deposit of One crore [See 2008-TIOL-1402-CESTAT-MUM]
ST - Appellant undertaking construction of diaphragm wall and anchor slab with special fill for Sabarmati River Front Corporation Ltd. - department alleging that such activity falls within the scope of "site formation and clearance, excavation and earthmoving and demolition services" and confirming demand of Rs.71.27 lakhs with interest and penalties - from the contract entered and the letter of the Municipal Commissioner, Ahmedabad to the departmental authorities it is clear that the activity undertaken relates to construction services and the object of the project is to develop water bodies and recharge water sources - said activity stands excluded from the scope of the taxable service alleged by department - prima facie appellant has made out a strong case in favour for grant of stay - Unconditional waiver of pre-deposit and stay granted: CESTAT [See 2013-TIOL-877-CESTAT-MUM]
The appeals were heard on 09/05/2014 and the orders have been passedrecently.
The Bench after hearing both sides & upon going through the Project report and bid documents observed -
++ It is seen from the said documents that appellants are required to construct diaphragm wall, anchor slab and retention wall with special fill for guide bund in different sectors alongside the Western and Eastern Bank of the Sabarmati River in Ahmedabad. The said work is to reclaim a part of the river bed land of the Sabarmati River. Keeping in view, the nature of activity, we have no hesitation in holding that the whole activity is in connection with the reclamation of land. In our view, this is the main and most important activity for reclaiming the land. In fact even from the expenditure angle the amount spent in the said activity would form the major portion of expenditure in connection with the reclamation of the land (excluding the facilities like commercial complex, residential complex, roads etc. to be construed later on the reclaim land.) We have, therefore, no hesitation in holding that the activity undertaken by the appellants are site formation and clearance, excavation and earth moving and demolition service.
++ The exclusion clause appearing in the definition of "site formation and clearance, excavation and earth moving and demolition service" excludes services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources and water bodies. The activities are being undertaken on Sabarmati River and the river is a water body.
++ We find strength in the argument of the appellant that their activities are in the nature of renovating or restoring of water sources and water bodies. Even though, the river front that is being developed is new project and is going to create new facilities but the same can be considered in a broad sense as renovating or restoring of water sources and water bodies.
++ We find in the impugned order a narrow view has been taken for the said terms and it is taken to mean repairing and restoring the existing facilities. In our view, the water body is already existingand what is being done is to renovate the banks of the river. In view of this position, we are of the view though the activity undertaken by the appellants are covered by the main definition but gets excluded due to the exclusion clause. In view of this analysis, the activity undertaken by the appellant will not get covered by the "site formation and clearance, excavation and earth moving and demolition service" and accordingly no service tax would chargeable.
In fine, the appeals were allowed.
(See 2014-TIOL-1369-CESTAT-MUM)
