Structure created for Commonwealth Games cannot be considered as Commercial or Industrial Venture: CESTAT quashes Service Tax Demand [Read Order]

Commonwealth Games

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal, while allowing tax relief to M/s Punj Lloyd Ltd, held that Structure created for Commonwealth Games cannot be considered as the commercial or industrial venture for the purpose of imposing service tax.

In the present case, the dispute arose with the decision of Revenue considering that agreement agreed to by the appellant company liable for service tax under ‘works contract service’. The Assessee entered into an agreement with Municipal Corporation of Delhi for providing the parking facility for Commonwealth Games-2010. Proceedings were initiated against the appellant by issuing show cause notice and the appellant contested for the same, therein original authority raised the demand and confirmed the penalty under section 78 and 77 of the Finance Act, 1994.

The counsel for Appellant Company, Advocate Sujit Ghosh & Shashant Shekhar contended before the bench that the above-mentioned construction is a part of the infrastructural requirement for the Commonwealth Games, called for substantial parking facility to cater to the vehicles used for transporting sportspersons and other connected personnel.

The assessee also argued that the said facility created for commonwealth games and not meant for commercial usage then the tax liability under works contract service cannot be sustained. The appellant also reminded the bench that WCS covers only civil structures primarily used for the purpose of commerce or industry.

After hearing the arguments from both the sides and analyzing the agreement, the bench observed that regarding usage of the said facility it was clarified that no parking charges were levied during the Commonwealth Games. Thereafter, the said parking facility is being used as road connection between Barapullah Elevated Corridor and the other part of the facility being used for the parking of City Bus Service under the control of GNCTD.

The Tribunal bench admitted the contention of Assessee that WCS covers only civil structures which are for commerce or industry and observed that “It is clear that the said games were organized and conducted by the Govt. involving the participation of a large number of countries. Such sports event and the structure created for such sports event cannot be considered as commercial or industrial venture”.

 

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