By TIOL News Service

MUMBAI, JUNE 20, 2015: THIS is a Revenue appeal filed against an order passed by the Commissioner (Appeals).

The short issue is as to whether the respondent, while executing a work order awarded to them by Goa State Urban Development Agency (GSUDA) for a project name "Construction of Market-Cum Community Hall and Park, Phase-I Land Development" had provided the taxable service of "Site formation and clearance, excavation and earth moving and demolition" as contended by Revenue.

The respondent submitted that they were awarded a Works Contract for construction of Market-Cum Community Hall, Phase-I, on the basis of a tender and that the character of the work was construction of market-cum community hall and not the activity of land development.

The Bench went through the agreement executed between the respondent and GSUDA and noted -

++ We have seen the schedule of quantities submitted by the respondent which gives the quantity, rate and amount under the following section heads: earthwork, stonework, plain and reinforced cement concrete, formwork, and steel, miscellaneous.

++ The details of work under these sections also includes RCC for foundations, bases of columns etc; construction of walls up to floor two level; suspended floors, roofs, shelves and their support balconies; steel reinforcement for RCC Work, providing fabricating and erecting trap gates as well as reinforced cement concrete pipes.

After extracting the definition of the taxable entry "Site formation and clearance, excavation and earthmoving and demolition", the Bench observed -

"…From the above definition we find that the site formation basically refers to earth work or activities related to earthwork or, at the most, drilling for the passage of cables or drain pipes. Whereas the activities undertaken by the respondent indicate a comprehensive works contract which includes appreciable RCC work for foundations, columns and walls apart from construction of walls, laying of pipes. The definition includes creation of passages for pipes. It does not include laying of pipes itself. There is merit in the finding of the Commissioner (Appeals) that if such works are held to be taxable under the site formation service, then every such project would involve the activity of site formation. Revenue could at most tax only that part of the contract which involves site formation and related earthwork and not the entire works. But that has not been done by Revenue. Be that as it may, the total activities undertaken cannot be categorized under the Site Formation service. The nature of work is more akin to a comprehensive works contract. It is not the argument of Revenue that the same may be split up into components including the component of site formation. Therefore, we hold that the work undertaken by the respondent cannot be termed as an activity of "Site formation and clearance, excavation & earthmoving & demolition"."

In fine, the Revenue appeal was dismissed.

(See 2015-TIOL-1192-CESTAT-MUM)