The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) recently held that the construction services provided by an Individual Service Provider are not subject to tax for the period prior to 01.05.2006.
In the instant case, the department observed that the assessee, an individual, failed to take out registration nor made any payment of service tax even though he provided construction service to various customers. The assessee, who failed to get relief from the first appellate authority, approached the Tribunal on the second appeal.
Before the Tribunal, the assessee contended that the definition of construction service was made applicable only for service rendered by “a commercial concern’’. The appellant was an individual and cannot be considered as a commercial concern.
After hearing both sides, the division bench noted that the activities carried out by the appellant fall within the definition of Commercial or Industrial Construction Service. “However, the definition was applicable only to a “commercial concern” up to 01.05.2006. Since the appellant was an individual service provider, he will not be covered within the term “commercial concern” as has been clarified by the CBEC vide it’s Circular No. 59/8/2003 dated 20.06.2003 and 62/11/2003-ST dated 21.08.2003. Consequently, the levy of service tax cannot be sustained for the period up to 30.04.2006, and is set aside,” the bench said.
Before concluding, the bench observed that with effect from 01.05.2006, the definition stands amended and has been made applicable to “any person”. Consequently, the appellant will be liable for making payment of service tax w.e.f. 01.05.2006.