CCE Vs. DARE BUILDERS

JUDGEMENT

(1.) THIS is an appeal by Revenue against the order dated 15.07.2008 passed by the Commissioner (Appeals), allowing the appeal of the respondent assessee and rescinding the adjudication order dated 12.02.2008 passed by the Assistant Commissioner of Customs, Central Excise & Service Tax, Division Sagar. During 21.09.2004 to 28.03.2005 the assessee received Rs. 1,01,044/ - from M/s. Rabindranath Tagore Memorial Trust (RTMT) for providing commercial or industrial construction service to RTMT. The assessee failed to remit service tax. Therefore proceedings were initiated by issuance of a show cause notice. Eventually the adjudication order was passed confirming the service tax demand of Rs. 1,01,044/ -; penalty of Rs. 1,03,066/ - under Section 78 and penalty of Rs. 1,000/ - under Section 77 apart from ordering remit of the appropriate rate of interest under Section 75 of the Finance Act, 1994 (the Act), confirming the proposal in the show cause notice dated 28.12.2006. The adjudicating authority recorded and on analysis of the material on record that the assessee had entered into an agreement with RTMT for construction of shops for the later which had rented out these shops for commercial purpose. The adjudicating authority negatived the assessee's claim for exemption predicated on Notification No. -ST dated 25.04.2006, rightly, on the ground that the said notification only specified the date of commencement of provisions relating to the taxable service of Commercial or industrial Construction, leviable with effect from 01.05.2006 and the notification was not under Section 93, granting exemption of tax. The adjudication order also noted that the contract between the assessee and the RTMT was only for construction of shops and the services provided by the assessee therefore constituted commercial and industrial construction service under Section 65(25)(b) of the Act.

(2.) IN considering the assessee's appeal however the appellate authority in para 5 has recorded that the adjudicating authority erred in assuming that the service provided to RTMT is not in respect of commercial buildings and on the penalty aspect the adjudicating authority had wrongly assumed that service was provided in respect of commercial buildings since it was built out of funds generated from persons other than the gas tragedy victims. This conclusion was recorded by the appellate authority on the assumption that RTMT was itself is not into any commercial activity but was established only for carrying out social activities. On the basis of these conclusions the appeal was allowed, in favour of the assessee.

(3.) COMMERCIAL or Industrial Service is defined to mean construction of a new building or a civil structure or a part thereof including completion and finishing services in respect thereof and repair, alteration, renovation or restoration of the same, which is used, or to be used, primarily for commerce and industry (to the extent relevant and material). The thrust of the definition is not on the general character of the activities of the recipient of the taxable service. The definition requires the construction of the new building or structure to be used primarily for commerce or industry, to be taxable. As recorded by the adjudicating authority and in absence of any material to demonstrate the error of such finding of fact, it is clear that the agreement between the petitioner and RTMT was in respect of construction of shop for RTMT which were found to have been rented out for commercial purpose by RTMT. The activity / service provided by the respondent assessee therefore squarely falls within Commercial or Industrial Construction Service as defined in Section 65(25b). On the aforesaid analysis, the order of the Commissioner (Appeals) is fundamentally misconceived and is accordingly quashed. The order of the adjudicating authority C. No. V(ST) 15 -60/ADJ/06 dated 12.02.2008 is restored. There shall however be no order as to costs.