whether carpentry activities falls under the ambit of “interior decorator” ?

PJ/CASE LAW/2016-17/3054

Case:-DIVEKAR ASSOCIATES Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III

Citation:-2015 (40) S.T.R. 1101 (Tri. - Mumbai)

Issue:-whether carpentry activities falls under the ambit of “interior decorator” ?

Brief Facts:-The relevant facts that arise for consideration are during the period 1999-2003 it was alleged that the appellant undertook various activities like carpentry work involving different types of furniture items, modular partitions, fixation of false ceiling, painting of walls and ceilings, etc., which falls under the ambit of “interior decorator” under Section 69 of the Finance Act, 1994 and having not discharged the service tax liability, show cause notice was issued by invoking the extended period. Appellant contested the show cause notice on merits. The adjudicating authority after following due process of law held that the appellant is liable to pay the service tax hence confirmed the demands with interest and also imposed penalties. Aggrieved by such an order, an appeal was preferred before the first appellate authority. The first appellate authority also concurred with the view of the adjudicating authority and rejected the appeal filed by the appellant.

Appellant’s Contention:-Learned counsel draws the attention to the allegation made in the show cause notice and the findings recorded by the adjudicating authority as well as first appellate authority. They would submit that both the authorities have categorically recorded that the appellants are engaged in the business of manufacturing of furniture as per the design and drawing specifically provided by the client. It is their submission that the said activity of the appellant could not fall under Section 65(59) of the Finance Act, 1994 which defines that “interior decorator services”. They would submit that the activity undertaken by the appellant would fall under the category of ‘Erection, Commissioning or Installation Services” or under “Commissioning or Installation Service” which came into service tax net from 16th June, 2005. It is their submission that identical issue came up before the Tribunal in the case of Spandrel v. CCE, Hyderabad/Kochi - 2010 (20)S.T.R.129 (Tri.-Bang.) wherein the Bench held in favour of the appellant therein. They produces a copy of the said judgment. They would also submit that this view of the Bench was followed by the Tribunal in the case of Space Decorators v. CCE, Pune-III - 2012 (26)S.T.R.346 (Tri.-Mumbai) and held that the activities could not fall under the category of “interior decorator”.

Respondent’s Contention:- Learned D.R. on the other hand would submit that the activity undertaken by the appellant would fall under the services of “interior decorator” as they were engaged indirectly in the business of providing technical assistance or any other manner related to planning, design or beautification of spaces. Their submission is that the appellant was enhancing the interior of the flat where they undertook the work of modular partition. It is their submission that the appellant in his statement stated that they are undertaking the activity of fixation of modular partitions, which would definitely fall under the category of “interior decorator”.

Reasoning of judgement:- They have considered the submissions made by both sides and perused the records.
They need to go through the definition as amended, in Section 65(59) of Finance Act, 1994 : -
“Clause (59) of Section 65 of the Finance Act, 1994 defines ‘interior decorators’ as -
“ ‘interior decorators’ means any person engaged whether directly or indirectly in the business of providing by way of advice, consultancy, technical assistance or in any other manner, services related to planning, design or beautification of space whether man-made or otherwise and includes a landscape designer”.
It can be seen from the above reproduced definition, the activities which are undertaken by the appellant are not falling under the category of “interior decorator services”. They find strong force in the submissions made by the learned advocate that the issue is finally settled by the decision of this Tribunal in the case of Spandrel (supra) (in which one of us was a Member). They reproduce the relevant paragraphs : -
“7. The term ‘Commissioning or Installation’ has been defined under Section 65(39a) of the Act, as : -
(i)         Erection, commissioning or installation of Plant (Machinery Equipment or Structures whether fabricated or otherwise); or
(ii)        Installation of -
(a)        electrical and electronic devices including wiring or fitting therefor; or
(b)        plumbing, drain laying or other installations for transport of fluids; or
(c)        heating, ventilation or air-conditioning including related pipe, work, duct work and sheet metal work; or
(d)        thermal insulation, sound insulation, fire proofing or water proofing; or
(e)        lift and escalator, fire escape staircases or travelators; or
(f)         such other similar services;
The various kinds of work include carpentry work involving execution of different types of furniture, modular partitions fixation of false ceiling painting of walls and ceiling and all these activities are carried out under the control and supervision of the appellant as per the agreement/contracts entered into. These facts have been admitted by Shri Divekar i.e. the appellant in his statement recorded under Section 14 of the Central Excise Act, 1944. The service provided by the appellant is related to planning, designing and beautification of space.”
In view of the foregoing and the facts and circumstances of this case as also the judicial pronouncement, they hold the impugned order is unsustainable and liable to be set aside and they do so.

Decision:-Impugned order is set aside and the appeal is allowed with consequential relief.

Comment:- In the present case the assessee was engaged in manufacturing of furniture as per design, drawing and specification provided by client and also undertaking work of modular partition. Tribunal held that the activities will be covered under the “Commissioning or Installation” Services.

Submitted By:- Somya Jain

Comments

PJ/CASE LAW/2016-17/3054

Post a Comment

Query