Commissioner Vs Paresh S Patel (CESTAT Ahmedabad)
The Revenue appealed against Order-in-Original No. AHM-EXCUS-003-COM-015-20-21 dated 16.07.2020, by which the adjudicating authority had dropped the service tax demand raised through Show Cause Notice dated 24.10.2013 along with the proposed penalties. The respondent also filed cross-objections commenting on the Revenue’s appeal.
The respondent was engaged in providing construction services to various government organisations, including the Road and Building Department, Gujarat State Police Housing Corporation Limited (GSPHCL), Agriculture Produce Market Committee (APMC), GETCO and others. According to the department, during 2008-09 to 2011-12 the respondent neither obtained service tax registration nor paid service tax. Following investigation, the department alleged that the respondent had executed works contracts involving construction of residential quarters and other civil works, had paid VAT/Sales Tax on transfer of property in goods, and had short-paid service tax of ₹2,60,54,847 on works contract services and ₹5,28,334 under reverse charge on Goods Transport Agency (GTA) services. The Show Cause Notice also proposed recovery of interest and penalties under Sections 75, 76, 77 and 78 of the Finance Act, 1994.
The adjudicating authority examined the contracts project-wise and financial year-wise. It recorded that the respondent had undertaken construction of hostels, staff quarters, educational institutions, government libraries, roads, archaeological works, community halls, health centres and other public infrastructure for government agencies. The authority discussed the statutory provisions relating to “construction of complex”, “residential complex”, works contract service under Section 65(105)(zzzza), and the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, together with CBEC Circular No. 128/10/2010-ST dated 24.08.2010. It concluded that construction of residential staff quarters and similar projects for government departments intended for personal residential use fell within the exclusion from “residential complex”. It also observed that the government structures constructed by the respondent were not primarily for commerce or industry and relied upon various judicial decisions while dropping the demand.
