By TIOL News Service

NEW DELHI, MAY 20, 2014: THE appellant had provided construction services to around 36 bodies/ institutions during 01/04/2005 to 31/03/2010 and 01/04/2010 to 31/03/2011, including to an Uttar Pradesh State instrumentality known as the U.P. Avas Avam Vikas Parishad (Vikas Parishad) for housing persons who are below the poverty line; the LIC, several trusts and foundations promoting and maintaining educational institutions and to another State instrumentally, the U.P. Rajkiya Nirman Nigam Ltd. - for establishment of a medical college and hospital; to the IIT Kanpur; and to several private bodies for establishment of infrastructures towards pursuing commercial or industrial objectives.

The appellant filed ST-3 returns under "commercial or industrial construction" service category and remitted tax on the consideration received from those bodies for which it rendered construction services which were for commercial or industrial purposes. Revenue alleged that all the services are taxable under the head "construction of residential complex" and "commercial or industrial construction" and SCNs were issued for a cumulative service tax liability of Rs.1.68 crores.

In adjudication, the appellant apart from presenting their justification for non-payment of ST as mentioned above also informed that in respect of services provided to Sat Bio Tech India Ltd. and GR Home Developer, no consideration was received from these bodies during the impugned period, but receivables on this account were enumerated in its balance sheets since the petitioner was following the accrual basis of accounting, however, consideration though disclosed in the balance sheet was not taken into account for remittance of Service Tax.

As none of the above contentions commended acceptance by the Adjudicating Authority and the levy and assessment as proposed was confirmed by the impugned adjudication order, the appellant is before the CESTAT.

The Bench observed -

++ In view of the decision of Tribunal in Macro Marvel Projects Ltd. vs. CST, Chennai - 2008-TIOL-1927-CESTAT-MAD and the absence of any attribution in the show cause notice or in the impugned adjudication order that constructions by the petitioner were in relation to construction of residential complex service, since more than 12 residential units were constructed and since there is no finding recorded that the residential units were not for the personal use of the recipient in terms of the statutory definition, in particular the explanation set out in Section 65 (91a) of the Act, we see a strong prima facie case in favour of the petitioner.

++ Insofar as construction services provided by the petitioner in respect of establishment or maintenance of educational institutions, the same prima facie appears to be outside the ambit of commercial or industrial construction service in view of Board Circular No. 80/10/2004-ST dated 17/09/2004 and the decision of Tribunal in Adhunik Techno Sanitation Pvt. Ltd. vs. CCE, Jaipur-I wherein waiver of pre-deposit was granted on the premise that constructions for educational institutions fall outside the ambit of commercial or industrial construction service.

In fine, the Bench granted waiver of pre-deposit and ordered a stay in the matter.