CESTAT upholds Service Tax on Community Centre Construction as Commercial Activity, Confirms Tax on Admitted Services [Read Order]
CESTAT held that service tax was payable on the construction of GDA’s fee-based community centre while setting aside penalties on admitted services already paid, partly allowing the appeal and sustaining liability only on the taxable construction activity.
commercial construction services,service tax act
commercial construction services,service tax act
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the service tax demand on Anubhavi Constructions for the construction of a community centre for the Ghaziabad Development Authority (GDA), holding that the activity constituted “commercial or industrial construction” as the facility was used for public functions against prescribed charges.
The dispute began when officers visited the appellant’s premises on 17.05.2010, resumed records under panchnama, and recorded statements revealing that the firm was engaged in electrical works, erection of poles, cabling, and construction-related activities without properly declaring taxable services or filing ST-3 returns.
The scrutiny of seized and submitted records showed that the appellant had provided multiple taxable services, including Erection, Commissioning, and Installation Services (ECIS), Business Auxiliary Services (BAS), and Goods Transport Agency (GTA) services even without registration.
Based on this, a Show Cause Notice dated 01.05.2013 proposed a demand of ₹14,91,935 with interest and penalties for willful suppression.
Although the appellant later deposited service tax on admitted ECIS, BAS and GTA services along with interest on 23.11.2012, the adjudicating authority confirmed the full demand and imposed penalties under Sections 77 and 78 of the Finance Act, 1994.
On appeal, the Commissioner (Appeals) upheld the demand, concluding that the community centre was a commercial structure since GDA charged fees for its use, and therefore the construction fell squarely under taxable Commercial or Industrial Construction Service (CICS).
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The Commissioner (Appeals) also held that extended limitation applied due to non-registration, non-filing of returns, and suppression of receipts.
The Bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) held that the appellant had already admitted tax liability on ECIS, BAS, and GTA services and paid the same with interest before issuance of the SCN, making the imposition of penalty on that portion unsustainable under Section 73(3).
However, the Tribunal agreed that construction of the community centre for GDA was taxable, noting that nothing was produced to show it was a purely charitable facility.
The Tribunal also directed verification of the appellant’s claim that ₹1,64,469 had already been deposited by Uttar Pradesh Rajkiya Nirman Nigam Ltd to prevent double taxation.
The Tribunal partly allowed the appeal by upholding the demand on construction services, confirming the penalties under Section 77, restricting penalty under Section 78 to the unpaid portion of tax, and also maintaining the tax liability on the admitted services.
The assessee was represented by Anurag Mishra, while A. K. Choudhary appeared for the Revenue.
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