Civil, electrical, inte¬rior and miscellaneous work fall under ‘completion & Finishing services’ of Commercial & Industrial Construction Services.

PJ/Case Laws/2012-13/1435

Case:- COMMISSIONER OF S.T., NEW DELHI Versus FANKAAR INTERIORS PVT. LTD.

CITATION:- 2012 (28) S.T.R. 270 (Tri. – Del.)

Brief Facts:-As per facts on record, the respondents filed an application for refund of on the ground that the said amount sands wrongly deposited by them as Service Tax under the impression that the said activities undertaken by them amounts to providing construction services. However, subsequently, they were advised that the activities carried out by them does not amount to construction services inasmuch as they were carrying out the various works as per drawings and blue print supplied to them by the architects and interior decorators appointed by their clients directly. They were issued a SCN proposing to deny the refund claim on the ground that the services undertaken by them correctly fall under the category of construction services as per Section 65(30a) which existed during the period from 10-9-2004 to 16-6-2004. The adjudicating authority after hearing the respondents, rejected their refund claim on the above ground. Being aggrieved with the order passed by the original adjudicating authority, the respondents filed an appeal before the Commissioner (Appeals). The adjudicating authority set aside the order of the original adjudicating authority and allowed the appeal. Hence, the present appeal.

Appellant Contentions:-Revenue's contention is that amendment effective from the 16-6-2005 has only defined services more specifically and it is not correct to infer that the services were not taxable prior to 16-6-2005. It is their contention that even after the amendment in the said section, the activities which are admittedly completion and finishing services would still be taxable under clause 'b' of Section 65(30a) as it existed prior to 16-6-2005.

Respondent Contentions:- The appellant submitted that for the sake of easy reference, the definition as it existed prior to 16-6-2005 and after 16-6-2005 are being reproduced below
"Construction service" means,-
(a)                         construction of new building or civil structure or a part thereof; or
(b)                        repair, alteration or restoration of, or similar services in relation to, building or civil structure, which is -
(i)            used, or to be used, primarily for; or
(ii)           occupied, or to be occupied, primarily with; or
(iii)          engaged, or to be engaged, primarily in,
commerce or industry, or work intended for commerce or industry, but does not include road, airport, railway, transport terminal, bridge, tunnel, long distance pipeline and dam - Section 65(30a)."

After 16-6-2005
"commercial or industrial construction service" means -
(a)                 construction of a new building or a civil structure or a part thereof; or
(b)                 construction of pipeline or conduit; or
(c)           Completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or
(d)           repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is –
(i)            used, or to be used, primarily for; or
(ii)           occupied, or to be occupied, primarily with; or
(iii)          engaged, or to be engaged, primarily in,

commerce or industry, or work intended for commerce or industry, but) - does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams' - Section 65(25b)"

As is clear from the above, the definition of construction services was amended along with the new heading clause 'c' so introduced with effect from 16-6-2005 relate to the completion and finishing services. If the Revenue's stand that such services were covered by the earlier definition is accepted, the newly introduced clause 'c' would become redundant as in that case, there is no need to introduce the said clause. As such, we find full favour with the reasoning adopted by Commissioner (Appeals).

Reasoning of Judgment:-The Tribunal has considered the submissions. Respondent were engaged in the execution of interior, civil, electrical and miscellaneous work as per the work contract placed upon them by to M/s. ICICI Prudential Life Insurance Co. Ltd. The activities involve site preparation, civil works, carpentry, supply of loose furniture and other miscellaneous job such as laying of floor tiles, PVC pipes, power and lighting wiring, telephone wiring, fire alarm system wiring, music system wiring etc. By referring to the definition of Construction services as appearing in Section 65(30a) of the Finance Act, and by referring to the Commercial and industrial construction services appearing in Section 65(25b) after 16-6-2005, it is observed that the activities undertaken by the respondents were the services contained in the definition under newly introduced clause 'c' of Section 65(25b) of the Act with effect from 16-6-2005 and not clause 'b' of Section 65(30a) as it existed prior to 16-6-2005. For better appreciation of the arguments adopted by the Commissioner (Appeals), we reproduce the relevant paragraph from the impugned order:

"It is evident from the insertion of clause 'c' in the Section ibid, w.e.f. 16-6-2005 that the services which are alike to that undertaken by the appellants were not covered by the clause (b) prior to 16-6-2005 as said services were inserted in newly named 'Commercial and Industrial Construction Service' as per Section 65(25b) only w.e.f. 16-6-2005. The above changes in the statutory provisions have also been clarified by the department vide letter F. No. V/DGST/22/AUDIT/ MISC/1/2004, dated 16-2-2005 that scope of construction services has been enlarged by introduction w.e.f. 16-6-2005 and scope of "Commercial or Industrial Construction Service" was expanded w.e.f. 16-6-2005 so as to include completion and finishing services. l find that some of the jobs undertaken by the appellants such as floor and wall tiling, wood and metal joinery and carpentry, acoustic applications or fittings find specific mention in the clause (c) of the Section 65(25b) which came into effect from 16-6-2005 and never existed in the old Section 65(304 which come into effect from 16-6-2005 and never existed in the old Section 65(30a) covering 'Construction services' prior to 16-6-2005. In other words such activities undertaken by the appellants can be considered for taxability under the Section 65(25b) by virtue of clause ‘c’ w.e.f. 16-6-2005 only and not prior to 16-6-2005 under clause ‘b’ of the Section 65(30a) under “repair, alteration or restoration” as such services did not liable for service tax for this reason alone during the relevant period. I further find that the adjudicating authority has conceded that the some of the works undertaken by the appellants while executing the aforesaid contracts were of a kind of "renovation" of the existing buildings of the client. I find that even if the some of the jobs undertaken by the appellants are considered as "renovation", the services cannot be covered under the 'Construction Services' as per Section 65(30a) prior to 16-6-2005 as the service of 'renovation' has also been inserted in the clause (d) of the Section 65(25b) covered newly named 'Commercial and Industrial Construction Service' only w.e.f. 16-6-2005 and never existed in the Section 65(30a). In view of the above I hold that the services undertaken by them appellants as per taxable contracts with M/s. ICICI Prudential Life Insurance Co. Ltd. were not taxable under the category 'Construction Services" as per Section 65(30a) during the relevant period."

It was also noted that the Tribunal in the case of Spandrel v. CCE, Hyderabad as reported in 2010 (20) S.T.R. 129 (Tri.-Bang.) has held that the finishing services like False ceiling, partitions, flooring, modular system, painting, carpeting, wall panelling and interior decorator services having been brought to the commercial or industrial services from 16-6-2005 are not covered by the definition for the earlier period. As such, Tribunal is of the view that the Revenue has no case on merits. The appeal is liable to be rejected. The same is accordingly, rejected.

Decision:- Revenue appeal rejected.

Comment:- The substance of this case is that when clause (c) regarding completion and finishing services was introduced w.e.f. 16.06.2005 in the Construction or Industrial Construction Services, it cannot be held to be liable to service tax prior to this period under any other head of the same service as this would render the introduction of such clause irrelevant.

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PJ/Case Laws/2012-13/1435

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