Decided on February 02,2015

Chaitanya Constructions Appellant
C.C.E. And S.T. Respondents


B.S.V.MURTHY,MEMBER (T) - (1.) DEMAND for Service Tax of Rs. 94,18,889/ - has been confirmed with interest. Period involved is from 1 -4 -2005 to 30 -9 -2010. Besides demand for Service Tax with interest, penalties under various Sections have also been imposed. Learned Counsel on behalf of the appellant submitted that benefit of cum -tax treatment of the amount received has not been extended. An amount of Rs. 42,56,973/ - has been demanded under the Head "Industrial or Commercial Construction Services". He submits that the appellant has provided construction services involving construction of various water supply facilities to the Industrial Growth Centre at Bobbili. In this case, M/s. APIIC is an undertaking of Government of Andhra Pradesh with an objective for providing industrial infrastructure to industrial area under the Government of Andhra Pradesh. Learned Counsel relied upon the decision of this Tribunal in the case of Dinesh Chandra Agarwal Infracon P. Ltd. v. C.C.E., Ahmedabad [ : 2011 (21) S.T.R. 41 (Tri. -Ahmd.)] wherein pipeline laying undertaken for Gujarat Water Supply & Sewerage Board was considered and in that case, it was noted that water purchased by the Board was distributed at subsidized rates to rural and urban areas for irrigation and drinking and it was held that service cannot be said to be primarily for commerce. In this case, obviously the purpose was development of industry and water supply is for this purpose. The Commissioner in the impugned order has considered the view of this Tribunal in the case of Gujarat Industrial Development Corporation and has observed that the Tribunal has held that the purpose is commercial or industrial. Therefore, we find that in respect of this demand, the appellant may not have a prima facie case. As regards, the remaining demand, the construction of reservoir and laying pipelines was done for drinking water supply.
(2.) IN addition, there is also substantial amount of demand towards construction of shopping complex for Municipalities. In this case also, we cannot say that the purpose is not commercial at all even though it is meant for Municipality. Learned Counsel vehemently argued that the Municipality may not rent out for shopping but may rent out for the Government organization also and in any case, the Municipality is not a commercial organization. We are not convinced with all these arguments. The question is not whether the service provider is a commercial organization or not; the question is whether the objective of the service is commercial or industrial. When a shopping complex is constructed with an intention to rent out the shops, the objective is for income and therefore, it is for commercial purpose. Therefore, we find that the appellant has not made out a prima facie case in this regard also. In view of the prima facie analysis above, we direct the appellant -petitioner to pre -deposit a sum of Rs. 45 lakhs after taking credit for Rs. 5 lakhs already paid, i.e., Rs. 40 lakhs (Rupees forty lakhs only) along with proportionate interest within eight weeks from today and report compliance by 15 -4 -2015. In default of either deposit or furnishing proof of compliance, the stay granted as a consequence of this order shall stand dissolved forthwith and Revenue shall be at liberty to realize the entirety of the adjudicated liability, in accordance with law. (Pronounced in the open Court);

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