ST : Road constructed in a petrol pump to facilitate filling of fuel is not liable to service tax under category of "Commercial or industrial construction service"
■■■
[2011] 15 taxmann.com 200 (Ahmedabad - CESTAT)
CESTAT, AHMEDABAD BENCH
Commissioner of Service-tax, Ahmedabad
v.
Shilpa Constructions (P.) Ltd.*
MRS. ARCHANA WADHWA, JUDICIAL MEMBER
AND B. S. V. MURTHY, TECHNICAL MEMBER
ORDER NO. A/855/WZB (AHD.) OF 2010
APPEAL NO. ST/68 OF 2009
JUNE 24, 2010
Section 65(25b) of the Finance Act, 1994 - Commercial or industrial construction service - Period from 1-11-2006 to 31-3-2007 - Assessee was engaged in business of 'Commercial and industrial construction' - Assessee constructed road in a petrol pump to facilitate filling of fuel - Assessee's case was that they constructed road on which they had paid service tax wrongly because construction of road has been excluded from category of 'Commercial and Industrial construction' - Assessee sought for refund which revenue rejected - Revenue's only plea was that construction of driveway could not be equated with construction of road in as much as such driveway was not for public utility purpose but same was in connection with petrol pump owned by owner - Whether value of construction of road is to be included in value of service only when there is no segregation between construction of commercial complex and construction of road; if contract recognizes two activities as separate activities, even though construction of road is in connection with commercial complex, benefit has to be allowed - Held, yes - Whether in terms of Board's Circular No.Bl/6/2005-TRU dated 27.07.05, fact whether road is being constructed for public utility purpose or as a part of a commercial complex is not relevant - Held, yes - Whether since contract in present appeal was admittedly for construction of road only, assessee would be entitled to refund of service tax wrongly paid - Held, yes [Para 5] [In favour of assessee]
Section 11B of the Central Excise Act, 1944 - Claim for refund of duty - Period from 1-11-2006 to 3-3-2007 - Assessee providing 'commercial on industrial construction service' claimed refund of service tax on ground that it had wrongly paid service tax on construction of road which was not taxable - Commissioner (Appeals) allowed refund claim on finding that refund was not hit by bar of unjust enrichment inasmuch as (i) no separate demand for service tax had been raised in invoices, (ii) service recipient certified that it had not paid service tax, and (iii) chartered accountant also certified that no service tax had been received by assessee from service recipients - Whether Commissioner (Appeals) was justified in allowing refund claim - Held, yes [Para 8] [In favour of assessee]
R.S. Sarova for the Appellant. Bishan R. Shah for the Respondent.
ORDER
Mrs. Archana Wadhwa, Judicial Member. - Being aggrieved with the order passed by Commissioner (Appeals) Revenue has filed the present appeal. We have heard Shri R.S. Sarova, learned DR appearing for the Revenue and Shri Bishan R. Shah, learned advocate appearing for the respondents.
2. The facts of the case, in brief, are that the respondents are in the business of providing services under the category of "Commercial and Industrial Construction" and are holding valid registration. The respondents filed an application for refund for Rs. 2,99,462/- on 17.10.2007 before the JAC on the grounds that they had paid it wrongly for the construction of road which is exclude from the category of "Commercial and Industrial Construction" as defined under clause (25b) of Section 65 of the Finance Act, 1994. The said amount was paid against receipt of amounts for construction services rendered to a particular client during the period from 01.11.2006 to 31.03.2007. Since necessary documents evidencing exact nature of the services rendered, period of refund and amount of claim were not submitted a show cause notice was served to the appellants on 31.12.2007 on various grounds. The Assistant Commissioner adjudicated the said show cause notice vide impugned order wherein he rejected the claim for refund.
3. Being aggrieved with the rejection of refund claim appellant filed an appeal before Commissioner (Appeals). By relying upon the Board's Circular No.Bl/6/2005-TRU dated 27.07.2005 they submitted that the service tax is required to be paid on the construction of road only if the same is under a single contract for construction of commercial complex. In as much as their agreement with the client was only in respect of the road and the service tax in question has not been collected by them from their clients, they are entitled to the refund of the service tax amount of Rs. 2,78,735/-
4. While dealing with the above contentions of the respondents, Commissioner (Appeals) observed as under:
"5.1 There is no dispute that the "road" is excluded from the purview of the service tax as per the clear law provisions which reads as under:
(25b) "Commercial or Industrial Construction Service" means-
(a) construction of a new building or civil structure or a part thereof; or
(b) construction of pipeline or conduit; or
(c) completion and finishing services such as glazing, plastering, planning, 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 fitting 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;
Reading of the above clearly indicates that all services related to construction of roads are excluded from the purview of the construction service. The Board's Circular quoted by the appellants strengthens such interpretation. Paras 14.4 and 14.5 are reproduced hereunder:
14.4 At present, services rendered for construction of commercial or industrial building is taxable. However, construction of roads is not liable to service tax. A point has been raised that if a commercial complex is constructed which also contains roads whether the value of construction of roads would be liable to service tax.
14.5 If the contract for construction of commercial complex is a single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the construction of roads.
As seen from the above it is clear that if the contract for roads is separate no service tax is leviable. In the present case, the contract between the appellants and their client is only for roads. The term "Driveway work" used in the agreement is in relation to road work as can be seen from the Annexure-2 to the agreement. The adjudicating authority has erred in interpreting the description excavation, repair of pot holes, etc. as part of construction service and not related to road work. Further, the narration "Bitumen Carpet and Pavers Block" used in the invoices raised by the appellants is also as per the agreement and is in relation to the construction of the roads."
5. By observing as above, he allowed the refund of tax on the ground that construction of road does not call for payment of service tax and the refund is also not hit by the principle of unjust enrichment in as much as copies of the relevant invoice as also the certificate given by the client as also by the chartered accountant show that such amount was not recovered by the respondent from the customer. The said order of Commissioner (Appeals) is impugned before us.
6. The Revenue is aggrieved by the order on the ground that as per the contract entered into between the appellant and their customers there is no specific description of "road". The respondent had in fact constructed the driveway in the petrol pump of M/s. BPCL. Construction of driveway is only to facilitate those people who come to petrol pump for filling fuel and such construction work cannot be equated with construction of road so as to claim the exemption. They have further contended that the exclusion of the construction service pertaining to road is to help or facilitate general public in the public interest and its welfare. In as much as the construction of driveway in the petrol pump is in the interest of the commercial dealing for the petrol pump owner and not in the interest of general public, the same cannot be excluded. Since driveway cannot be considered as road, Board's Circular dated 27.07.05 is not applicable. Revenue has also challenged the grant of refund on the ground of unjust enrichment.
7. After carefully considering the submissions made by both the sides we find that it is an admitted fact by both the sides that the construction of road does not require payment of service tax. The Revenue's only appeal is that construction of driveway cannot be equated with the construction of road in as much as such driveway was not for public utility purpose but the same was in connection with the petrol pump owned by the owner.
In this connection we find that the Board's Circular No.Bl/6/2005-TRU dated 27.07.05 is to the effect that - "if the contract for construction of commercial complex is a single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the value of construction of road". As such it becomes clear that the value of construction of road is to be included in the value of the service only when there is no segregation between the construction of commercial complex and construction of the road. If the contract recognizes the two activities as separate activities, even though the construction of the road is in connection with the commercial complex, the benefit has to be allowed. As such the fact whether the road is being constructed for public utility purpose or as a part of a commercial complex is not relevant, in terms of the Board's Circular above. Accordingly we do not find any infirmity in the view adopted by Commissioner (Appeals), in as much as the contract in the present appeal is admittedly for construction of road only.
8. As regards the unjust enrichment, we find that Commissioner (Appeals) has referred to the fact that no separate service tax has been shown in the invoices raised against their claim. We also take note of the fact that a certificate stands produced by M/s. BPCL, who is a public sector undertaking to the fact that no service tax has been paid by them. Chartered Accountant certificate also is to the effect that no service tax has been received by the appellant. In these circumstances the bar of unjust enrichment would not get attracted.
9. In view of our above discussions, the appeal filed by the Revenue is rejected.
■■
____________
*In favour of assessee.
No comments:
Post a Comment