By TIOL News Service

MUMBAI, JUNE 25, 2013: THE applicant had undertaken interior work at 9 th floor, State Bank Bhavan, Nariman Point, Mumbai.

The Commissioner of Service Tax, Mumbai-II was mesmerized by the ‘kala' exhibited to such an extent that he demanded a ‘sagar' of Service tax of Rs.1.61 Crores from the applicant along with the accoutrements of interest and penalties.

Not happy with the damaging interiors the demand would do to their balance sheet, the applicant is before the CESTAT.

It is submitted that -

+ as per the work order, the applicant had only undertaken interior renovation of the part of the building, i.e. 9 th floor of the building.

+ as per the definition of commercial or industrial construction service, construction of new building and civil construction or part thereof are covered under the scope of tax leviable under the commercial or industrial construction.

+ The part of the building regarding which only the work of renovation has been undertaken cannot be considered as renovation in relation to the building.

+ The non-mentioning of ‘part thereof' in respect of renovation, repair, alteration or restoration shows the intention of the legislature that the renovation, alteration, repair or restoration are taxable under commercial or industrial service if it is undertaken in relation to building or civil structure.

+ as the applicant has undertaken the interior work at the 9 th floor of the building, the applicants cannot be held liable for providing commercial or industrial construction service hence the demand is not sustainable.

The Revenue representative relied upon the findings of the adjudicating authority and submitted that the combined reading of definition of commercial and industrial construction means the construction of new building and part thereof and it also includes repair, alteration, renovation or restoration of the building and part thereof. Inasmuch as the demand is rightly made.

The Bench observed -

"6. In the present case, the issue is whether the applicant provided any commercial or industrial construction service. For ready reference, the provisions are 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 restoration of, or similar services in relation to, building or civil structure, pipeline or conduit,

which is -

(i) used, or to be used, primarily for; or

(ii) occupied, or to be occupied, primarily with; or

(iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams"

Admittedly, the applicant has undertaken the interior work at the 9 th floor of SBI Bhavan, Nariman Point, Mumbai.

7. We have gone through the definition of commercial and industrial construction service. As per the definition, construction of new building or civil structure or part thereof is covered under the scope of taxable service. In respect of repair, alteration, renovation or restoration, it is specifically mentioned that it is in relation to building or civil structure. There is no mention in the definition ‘part thereof' in sub-clause (d) of the definition. In view of this, prima facie we find that the applicant has a strong in their favour, therefore the pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal…"

In fine, the stay petition was allowed.

In passing - See The Carpenters (2013-TIOL-646-CESTAT-MUM) & Sandeep Vilas Kotnis (2012-TIOL-328-CESTAT-MUM).

(See 2013-TIOL-956-CESTAT-MUM)