Shiv Naresh Sports Pvt. Ltd. Vs Commissioner Service Tax, (CESTAT Delhi)
Introduction: Delve into the intricacies of the service tax dispute between Shiv Naresh Sports Pvt. Ltd. and the Commissioner of Service Tax, as adjudicated by CESTAT Delhi. The case centers around the classification of services related to sports facilities, particularly the erection, commissioning, and installation services. An essential reference is made to the Tribunal’s ruling in the case of B.G. Shirke Construction Technology Pvt. Ltd., providing insights into the taxability of services related to sports facilities owned by the government.
Detailed Analysis: The case hinges on the nature of services provided by Shiv Naresh Sports Pvt. Ltd., which include the development of sports facilities, fixing seating arrangements in stadiums, and laying synthetic athletic track surfaces. The appellant contends that these services fall under the category of commercial or industrial construction services (CCIS). However, they argue that as the structures involved are non-commercial in nature, they should not be subject to service tax.
Key to their argument is the Tribunal’s precedent in the B.G. Shirke Construction Technology Pvt. Ltd. case, which established that stadiums used for non-commercial purposes, especially those owned by the government, are considered non-commercial constructions. The Tribunal reasoned that services provided for public benefit, even if a fee is charged, do not transform into commercial or industrial constructions.
The analysis extends to the laying of Synthetic Athletic Track Surface, drawing parallels with civil activities like floor and wall tiling. The appellant argues that these services, though falling under CCIS, should be exempt from tax when provided for sports facilities owned by the government.
Conclusion: CESTAT Delhi partially allows the appeal, determining that the services provided by Shiv Naresh Sports Pvt. Ltd. are not taxable. The Tribunal upholds the argument that the structures, being non-commercial and serving public purposes, should not be classified under commercial or industrial construction services for tax purposes.
However, the case is remanded back to the original Adjudicating Authority for further examination of issues related to unjust enrichment, limitation, and the implications of self-assessment, as these aspects were not addressed in the initial order.
This comprehensive analysis dissects the recent CESTAT Delhi order involving Shiv Naresh Sports Pvt. Ltd.’s service tax dispute with the Commissioner of Service Tax. Explore the intricacies surrounding sports facility services, commercial or industrial construction classification, and the implications of the Tribunal’s precedent. The full text of the order is included for a thorough understanding of the case.
Tribunal in the case of B.G. Shirke Construction Technology Pvt. Ltd. In said decision it has been held that the services provided for the sports facilities owned by State would not be chargeable to tax under commercial or industrial construction service. The relevant paragraph is as under :-
“5.2 In the case of B.B. Nirman Sahakari Samiti v. State of Rajasthan – AIR 1979 Raj. 209, a question arose as to what is a Public Utility? The Hon‘ble High Court held that ‘public utility‘ means any work, project which is going to be useful to the members of the public at large. The public benefit aided at or intended to be secured need not be to the whole community but to a considerable number of people. In American Law, the word ‘Public facility‘ has been defined as under :-
‘Public facility‘ means the following facilities owned by a State or local government, such as :-
(a) Any flood control, navigation, irrigation, reclamation, public power, sewage treatment and collection, water supply and distribution, watershed development, or airport facility.
(b) Any other Federal and street road or highway
(c) Any other public building, structure, or system, including those used for educational, recreational, or cultural purposes.
(d) Any park.
The Tribunal based on the above concluded that stadiums were deemed to be public utilities. The Tribunal further ruled as under:
The Sports Stadia is used for public purpose. Merely because some amount is charged for using the facility, it cannot become a commercial or industrial construction. Even in a Children Park, entry fee is levied for maintenance of the Park. Merely because some amount is charged for using the Park, it cannot be said that it is a commercial or industrial construction. Adopting the same logic, the Sports Stadia in the present case is also a non-commercial construction for use by the public. Therefore, we are prima facie of the view that the Sports Stadium constructed for conducting Commonwealth Games, is a non-commercial construction.
The activity undertaken in a stadium, which belongs to Government and is used for non-commercial activities, would not be covered under definition of CCIS as held by Tribunal in the case of B.G. Shirke Construction Technology Pvt. Ltd. In view of above, it is apparent that the activity of affixing chairs in a stadium would be covered under the description of service covered under commercial or industrial construction service, but not chargeable to tax for the reason that the structure for which the said activity has been undertaken is not of commercial nature.
The activity of laying of Synthetic Athletic Track Surface is akin to the activity of floor and wall tiling, wall covering and wall papering. The activity is of civil nature and, therefore, would be covered by the activities described in the definition of commercial or industrial construction service, however, since the same have been provided in respect of sport facilities owned by Government, State or Centre, the same would not be chargeable to tax.
FULL TEXT OF THE CESTAT DELHI ORDER
These appeals have been filed by M/s Shiv Naresh Sports Pvt. Ltd.1 against rejection of refund claims filed by the appellant.
2. The appellant had provided the following services to following recipient :-
