Civil construction of Petrol Pump-whether Erection, Commissioning & installation service?

PJ/Case Laws/2011-12/1529

Case: SUBHASH KHANDELWAL & SONS versus CCE, JAIPUR-I

Citation: 2011 (24) S.T.R. 461 (Tri. - Del.)

Issue:- Whether civil construction work done for constructing petrol pump of another would fall under the category of Erection, Commissioning and Installation services?

When no positive act or deliberate suppression – whether extended period of limitation can be invoked?

Brief Facts:- Demand of Service tax was confirmed against the appellant on the ground that while constructing the petrol pump on behalf of Reliance Engineering Associates Pvt. Ltd., they have provided the services of Erection, Commissioning and Installation. In addition, penalties under various Sections of the Finance Act, 1994 were also imposed on the appellants.

The Appellant are before the Tribunal against the demand of service tax with interest and imposition of penalty.

Appellant’s Contention:- Appellant contended that from the work order executed by them it is clear that the work undertaken by them was civil construction work such as masonry, sanitary work, road paving/laying and electrical work. As such it is their contention that they have only done the civil construction and have nowhere installed or commissioned any plant, machinery or equipment. As such they cannot be held as Commissioning agent under the said category of service so as to levy the service tax.

Reasoning of Judgment:- The Tribunal perused the description of commissioning and installation services given under Section 65(28) of the Finance Act, 1994.

It was noted that the Adjudicating Authority has made clear that the appellant has undertaken the work required for pre-commissioning of petrol pump. The definition of 'commissioning and installation' reveals that the same takes into ambit the services provided in relation to commissioning or installation of plant and machinery or equipment and not completing the job for pre-commissioning. Inasmuch admittedly the appellants have done civil construction necessary for a petrol pump where the machines have to be installed, it cannot be said that they have themselves undertaken the services falling under the category of commissioning and installation. As such, the confirmation of service tax against them is neither justified nor warranted.

It was also noted that demands of service tax were raised against the appellant by invoking the longer period of limitation. The lower authorities have observed that inasmuch as the appellants have never informed the revenue about the above services being provided to Reliance Engineering Associates and same came to the notice of the department during the course of audit, the extended period of limitation is justifiably invoked against them.

However, the Tribunal found that there is no evidence of positive act of suppression against the appellants. It is well settled law that mere non-filing of information to the Revenue on the reasonable belief that the activities undertaken by them are not taxable, cannot be held to be a justifiable ground for invocation of longer period of limitation.

Apart from the above, it was also taken into consideration the fact that the appellants have made a submission that the earlier show cause notice was issued to the appellants on 2-11-2007 for the same period on the basis of audit conducted by the department and all requisite information and records were submitted to them. In any case, in the absence of any positive act of suppression or misstatement with malafide intention, the Tribunal is of the view that demand beyond the normal period of limitation is not liable to sustain.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1529

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