The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the activities undertaken in the construction of the mega sports complex are not liable to service tax as the mega sports complex was not primarily meant for commercial purposes.
Laing-Simplex JV, the appellant assessee entered into two agreements with the Executive Engineer, Ranchi, Government of Jharkhand for the construction of a Mega Sports Complex at Ranchi for hosting the 34th National Games and the Government of Jharkhand had separately appointed a consulting engineer for planning, design, engineering, project management and other related services for development and construction of the said sports complex and the assessee was only appointed for undertaking the activity of construction as per the scope laid down.
The assessee appealed against the order passed by the Commissioner of Central Excise and Service Tax for confirming the service tax demand along with interest and the penalty equal to the service tax confirmed was also imposed under section 78 of the Finance Act, 1994 along with Penalties under section 76 and 77 of the Finance Act.
Rajeev Aarwal and Amit Jain, the counsels for the assessee contended that since the Sports Complex was not primarily meant for commerce and business, the same is not liable to service tax, and the fact that non-usage of Sports Complex for commercial purposes was also certified by the Executive Engineer, Special Works Division.
Also submitted that the Mega Sports Complex also contains restaurants, VIP Guest house, Hotel facility, etc. was only to make the sports complex habitable and functional and under international standards and the same in no way make the Sports complex meant for commercial purposes.
J. Chattopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable to pay the service tax and the demand raised by the revenue was as per the law and liable to be sustained.
The Bench observed that in the case of CCE&ST Pune Vs B J Shirke Construction Technology Pvt Ltd, the court held that the construction of Mega Sports Complex by the State government was not liable for service tax under ‘Works contract Service’.
The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) quashed the demand for service tax and penalty imposed on the assessee while allowing the appeal filed by the assessee.
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