A Single Activity of Laying of Interlocking Paver blocks and the Approach Roads not a Taxable Service: CESTAT [Read Order]

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the activity of laying of Interlocking Paver blocks and approach roads to the compound of the building was undertaken by the appellant as a separate and exclusive activity and not as part of the contract for construction of a factory/building not a taxable service.

The appellants are engaged in the manufacture of interlocking concrete bricks and is availing the benefit of SSI Scheme. The appellants are also undertaking to embed of interlocking bricks at the site of the customers for laying of internal roads and approach roads to the compound of the building on labour basis.

The department demanded tax from the appellants holding that the appellants are providing construction services during the period September 2004 to November 2005.

Before the Tribunal, the appellants contended that the activity of laying of internal roads and approach roads to the compound of the building was undertaken by the appellant as a separate and exclusive activity and not as part of the contract for construction of a factory/building. Therefore, they are specifically covered under the exclusive clause of the definition of ‘Commercial or Industrial Construction Service’.

“From the above, it is clear that construction of roads if undertaken as a part of the contract for construction of a commercial complex or industrial building, is taxable. In the instant case, the appellants have not undertaken any such activity and their contract with their buyers was limited to laying of interlocking paver blocks and the approach roads. Therefore, the findings of the impugned order appear to beyond the scope of provisions of law and the Circular issued,” the Tribunal said.