The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) directed the re-adjudication on Service Tax leviability of work undertaken for BECL under Construction of Complex Service. The Tribunal observed that the adjudicating authority had not properly examined the facts/ terms of the contract.  Shri Jigar Shah & Shri Amber Kumrawat Advocate appeared for the Appellant and Shri Rajesh Nathan, Assistant Commissioner ( AR ) appeared for the Respondent  The question was whether services provided by the Appellant, Vinay Construction Co. to GSPHCL become taxable under the category of ‘Construction of Complex Service’.

Further, questioned whether services by way of construction of a compounding wall for BECL become Taxable under the category of ‘Commercial or Industrial Construction Service’. Shri Jigar Shah, Counsel along with Shri Ambar Kumrawat Advocate appeared on behalf of the appellant. Construction of residential quarters undertaken by the appellant for Gujarat State Police Housing Corporation Ltd is not taxable under ‘construction of complex service’.  To attract the definition of the residential complex the number of residential units, in a building should be more than 12 units, whereas in the present case, the appellant has constructed less than 12 units in a single block. Therefore, the demand under ‘construction of complex service’ could not have been made by the department. The property constructed by the appellant gets transferred to the concerned department of the Government of Gujarat. Therefore, based on the principle of accretion the activity is not taxable. The appellant is not liable to pay Service Tax for the work undertaken for Bhavnagar Energy Company Ltd ( BECL ) under the head of ‘construction of complex service’. The same is not for commercial or industrial.

The computation of tax liability is incorrect in as much as the authority below has not considered the gross value as cumulative price. The extended period of limitation was wrongly evoked as there is no suppression of fact. The appellant cannot be made subject to penalty. Shri Rajesh Nathan, Assistant Commissioner ( AR ) appeared on behalf of the Revenue and reiterated the finding of the impugned order. A two-member bench comprising of Mr Ramesh Nair  Member ( Judicial ) And Mr Raju, Member ( Technical ) observed that the levy of service tax under the construction must be based on the terms of the contract. However, the adjudicating authority has not properly examined the facts/ terms of the contract and he has not seen the light of the judgements given subsequently on the identical issue. The CESTAT viewed that the entire matter needs a relook and to be decided afresh. While allowing the appeal by way of remand to the adjudicating authority for passing a fresh order and setting aside the impugned order. To Read the full text of the Order CLICK HERE