Classification of activity of laying paver blocks at port on behalf of main contractor.

PJ/CASE LAW/2014-15/2559

Case:- CONWOOD PRE FAB LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:-2014 (36) S.T.R. 1064 (Tri. - Mumbai)

Brief facts:- The appellant filed this appeal against the impugned order whereby a demand of Rs. 2,59,59,389/- is confirmed with interest and penalties are also imposed. The demand is confirmed on the ground that the appellant is providing business auxiliary service.
The brief facts of the case are that the Jawaharlal Nehru Port Trust (JNPT) awarded contracts to M/s. Thakur Infra Projects Pvt. Ltd. and M/s. Man Projects Ltd. for commercial construction in the port area. These contractors further awarded a contract to the present appellant for laying paver blocks at JNPT. A show cause notice was issued to the appellant demanding Service Tax under business auxiliary service on the ground that the appellant is undertaking the assigned job on behalf of their clients through contractors. The adjudicating authority confirmed the demand and imposed penalties.

Appellant’s contention:- The contention of the appellant is that the activity undertaken by the appellant covers under ‘commercial construction service’ rendered to a port and therefore is not taxable as per the provisions of Section 65(25b) of the Finance Act. The appellant relied upon the decision of the Tribunal in the case of National Building Construction Corpn. Ltd.v.C.C.E. & S.T., Patna reported in 2011 (23)S.T.R.593, to submit that in similar situation, the confirmed demand is set aside by the Tribunal.

Respondent’s contention:- The Revenue submitted that since work order has been given by the contractors i.e. M/s. Thakur Infra Projects Pvt. Ltd. and M/s. Man Projects Ltd., and the activity undertaken by the present appellant through contractors is a business auxiliary service. As the appellants were providing provision of service on behalf of the clients hence the appellants are liable to pay Service Tax on the consideration received from the contractors.

Reasoning of judgment:- They find that admitted facts of the case are that the appellant had undertaken the job of laying of paver blocks at JNPT. In the impugned order in para 35, the adjudicating authority also held that prima facie there is force in the claim of the appellant as they claim to be carrying out the work of constructing the structure at port by using paver block only and that they are only laying paver blocks at roads, commercial premises etc. hence the service is classifiable under commercial or industrial construction.
The contention of the appellant is that the appellants are providing commercial or industrial construction. The relevant provisions of Section 65(25b) of the Finance Act are reproduced below :-

“(25b) ”Commercial or industrial construction” 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.”

As per the provisions of the above Section, they find that the activity undertaken by the appellant, i.e. laying of paver blocks, more appropriately comes under the scope of ‘commercial or industrial construction service’ and the industrial construction service does not include any service provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. As commercial and construction activity is undertaken by the appellant at the port, therefore they find merit in the contention of the appellant that the activity undertaken by the appellant does not fall under the business auxiliary service. The impugned order is set aside and the appeal is allowed.

Decision:- Appeal allowed.

Comment:- The analogy of the case is that the activity of laying of paver blocks in the port area on behalf of main contractor is more appropriately classifiable under ‘commercial construction service’ and not under the category of ‘Business Auxiliary Services’. The activity of appellant comes under the commercial or industrial construction service which does not include service in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Hence, it was concluded that the activity rendered by the appellant was classifiable under ‘commercial construction service’ which is not leviable to service tax and so the appeal was allowed.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2559

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