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Case Law on Commercial or Industrial Construction Service

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Service Tax - Commercial or Industrial Construction Services - Revenue appeal against dropping the demand with respect to construction service as rendered by the appellant with respect to the work undertaken for Awas Vikas Sansthan Limited of Government of Rajasthan, under which they have constructed hospitals, Ambedkar Peeth, etc., as being non-commercial in nature and allowing abatement under Notification No. 1/2006-ST –

HELD – Perusal of definition of Commercial or Industrial Construction Services makes it clear that the services rendered by the appellant will fall under sub-clause C thereof. Since the material is also provided by the service provider, the case of the appellant as far as completion and finishing services as detailed above are concerned, it stands clearly covered under Item No. 5 of the Table given in N/No. 1/2006-ST dated 01.03.2006 - the Comm. (Appeals) has rightly extended the benefit of this notification. Further, since the Contracts were inclusive of material, the total value of one contract which amounts to transfer of property was to be excluded - The other construction services which are residential in nature, the phraseology itself takes the contract out of the definition of Commercial and Industrial Construction.

Hence, levying the demand for the said construction under the head of it being commercial is not sustainable – since the law requires assessee itself to determine the classification of service and to pay tax on self assessment basis. Since the assessee-respondent has failed to act accordingly, the penalty under Section 76 and 78 have rightly been confirmed – demand is set aside and penalty under Section 76 & 78 of Central Excise Act is upheld – revenue appeal is dismissed

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