By TIOL News Service

NEW DELHI, MAY 19, 2017: THE appellant had provided services of clearing the jungle and bushes within the premises of the building campus for the builder M/s Sobha Developers .

The department alleged that the services constitute ‘Site formation and clearance, excavation, earthmoving and demolition services' and is taxable under the Finance Act, 1994.

As the lower authorities confirmed the tax demand, the appellant is before the CESTAT and submits that as per the clarification given in Circular No. B1/6/2005-TRU dated 27.7.2005, only such activity which is prior to construction of building, factory or any civil structure is covered. Inasmuch as since in the present case the building had already been constructed, the same is not taxable service.

The AR justified the tax demand.

The Bench extracted the definition of ‘Site Formation and Clearance, Excavation, Earthmoving and Demolition Services', as given in clause 97(a) of Section 65 of the Finance Act, 1994 and observed thus -

"…From the plain reading of the above definition, it can be seen that the main clause of the definition does not cover the service of the appellant i.e. removing of jungle and bushes. Even if it is considered the inclusion clause of the definition, by no stretch of imagination, the same can be classified under the inclusion category of the definition of the subject service. Therefore, we are of the considered view that service namely, removing of jungle and bushes in the existing premises of the building does not fall under the definition of ‘Site Formation and Clearance, Excavation, Earthmoving and Demolition Services'. Therefore, such service is not taxable under the proposed head by the Department."

The impugned order was set aside and the appeal was allowed.

In passing: Extract from TRU letter -

6.2 The definition of site formation and clearance, excavation and earthmoving and demolition is an inclusive definition and the activities specifically mentioned are indicative and not exhaustive. Prior to construction of buildings, factory or any civil structure, activity of mining or laying of cables or pipes, preparation services of site formation and clearance, excavation and earthmoving or leveling are normally undertaken for a consideration to make the land suitable for such activities. Such services include blasting and rock removal work, clearance of undergrowth, drilling and boring, overburden removal and other development and preparation services of mineral properties and sites, and other similar excavating and earthmoving services. Demolition of structures, buildings, streets or highways is also undertaken for a consideration as a preparatory activity for subsequent construction activity or for clearing the site for any other purpose. All such activities fall within the scope of this service.

(See 2017-TIOL-1676-CESTAT-MUM)