Custom, Excise & Service Tax Tribunal
Rajkot vs Malani Construction Company on 2 December, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO. 3
Service Tax Appeal No. 11083 of 2018-DB
(Arising out of RAJ-EXCUS-000-COM-09-17-18Dated-29.12.2017passed by
Commissioner CGST & CX -Rajkot)
C.C.E. & S.T. Rajkot ........Appellant
Central GST & Central Excise,
Central GST Bhavan
Race Course Ring Road, Rajkot-360001
VERSUS
Malani Construction Company ........Respondent
Malani Complex, 58, Kotecha Nagar, Kalawad Road, Rajkot - 360001 APPEARANCE:
Shri Himanshu P. Shrimali, Superintendent (Authorized Representative) for the Appellant Sh. Amal Dave with Shri Parth Rachchh, Advocates appeared for the Respondent CORAM: HON'BLE MR. RAMESH NAIR (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) FINAL ORDER NO./ 12926 2024 DATE OF HEARING:07.11.2024 DATE OF DECISION:02.12.2024 RAMESH NAIR This is a departmental appeal filed against order in original No. RAJ- EXCUS-000-COM-09-17-18 Dated-29.12.2017passed by Commissioner CGST & CX-Rajkot.The issue involved in the present case is that whether the construction service provided by the respondent to the following institution can be considered as service provided to the Government Authority and if yes whether the same is covered under Exemption Notification No. 25/2012-ST and 02/2004-ST or otherwise.
(1) Indian Chartered Accountant Institute (ICAI) (2) Rajkot Municipal Corporation (3) GIDC for construction of Engineering College at Navsari
2. Shri H.P. Shrimali, learned Superintendent (Authorised Representative) appearing on behalf of the Revenue reiterates the grounds of appeal and also filed a written submission dated 07.11.2024 wherein he made following submissions:
A.The Adjudicating Authority has committed an error in dropping the demand of service tax in respect of the construction services provided by the respondent to Indian Chartered Accountant
2|Page ST/11083/2018-DB Institute (ICAI) (Rs. 12,80,544/-). ICAI may have been set up by the Act of Parliament and under the control of the Ministry of the Corporate Affairs, but ICAI does not carry out any functions entrusted to municipality under Article 243 of the Constitution. Therefore, exemption from service tax under Notification No. 25/2012 -ST dated 01.07.2012 is not admissible to the respondent.
B.The Adjudicating Authority has erroneously dropped the demand of service tax in respect of services provided to Rajkot Municipal Corporation( Rs. 1,40,96,139/-) for construction of Community Hall and Auditorium. The Adjudicating Authority has not examined the aspect of commercial use of auditorium and hall being collected from public by the Rajkot Municipal Corporation.
C.The Adjudicating Authority ought not to have dropped the demand of service tax on services received by GIDC for construction of Engineering College at Navsari (Rs. 98,98,226/-) because GIDC has not been given any mandate in respect of promotion of education. Therefore, GIDC cannot be considered to be a governmental authority so far as the construction of Engineering College for Imparting education is concerned.
D.Services Provided to Tourism Corporation of Gujarat Ltd. for construction of Fossil park at Kheda (Rs. 57,723/-), as TCGL has been set up by the Govt. of Gujarat for promoting cultural heritage and to boost tourism in the state therefore TCGL is Govt. Authority, hence services provided by TCGL is exempt from service tax.
E.Department in the present appeal that the Adjudicating Authority has not examined the fact that ICAI does not carry out any function entrusted to a municipality under Article 243W of the Constitution. The respondent submits that the Adjudicating Authority has given clear findings on this issue. The definition of "Governmental Authority" provided under the Notification No. 2/2014-ST dated 30.01.2014 lays down that the "Governmental Authority" means an authority or a board or any other body - (i)
3|Page ST/11083/2018-DB Setup by an Act of the Parliament or State Legislature; or (ii) Established by Government, with 90% or more participation by way of equity or control to carry out any of the functions entrusted to a municipality under article 243W of the Constitution.
F.Services provided to Rajkot Municipal Corporation for construction of Community Hall and Auditorium: the Adjudicating Authority has wrongly, dropped the demand of service tax on services provided by the respondent to Rajkot Municipal Corporation forconstruction of Community Hall and Auditorium. It is the case of thedepartment that the Adjudicating Authority has not examined the commercial aspect of the community hall and auditorium. The respondent submits that there is no merit in the submissions of the appellant. TheAdjudicating Authority has observed that Rajkot Municipal Corporation is a local body within the meaning of Section 65B(31) of the Finance Act, 1994.The Adjudicating Authority has also referred to the copy of thecertificate/letter ref. no. RMC/Eng/W.Z./1322 dated 10.11.2017 issued by theDy. Municipal Commissioner to the respondent in relation to the workscontract allotted to the respondent. The said letter dated 10.11.2017 hasspecifically mentioned that the auditorium is operated on non profit basisand only meant for the welfare of the citizens residing in the territorial limits ofthe Municipality.
G.Construction services provided to GIDC, Vapi: The Adjudicating Authority has wrongly dropped the demand of service tax in respect of construction of College at Navsari under the contract of GIDC, Vapi.The Adjudicating Authority has given the findings that GIDC provides services similar to some of the services covered under Twelfth Schedule under Article 243W of the Constitution like Regulation of land use and construction of buildings, planning for economic and social development, construction and maintenance of roads and bridges etc.Therefore, GIDC is a governmental authority as defined under Notification No. 25/2012-ST dated 20.06.2012. The Adjudicating Authority also held that the construction of Engineering College at Navsari was not for commercial or industrial purpose and therefore, the benefit of exemption from service tax is available to the respondent. He relied on the following decisions:
Shapoorji Paloonji& Com Pvt Ltd. 2016 (42) STR 481 (Pat.)
4|Page ST/11083/2018-DB National Development Board 2019(23) GSTL 151 (AAR-GST) Sarovar Hotels Pvt Ltd. 2018 (19) GSTL 650 (Tri. Hyd.) Commr vs Sarovar Hotels P Ltd. 2019 (22) GSTL J30 (SC)
3. Shri Amal Dave with Shri Parth Rachchh, learned counsel appearing on behalf of the respondent made the following submissions:
(A) Whether construction services provided to ICAI are exempt under Notification No.25/2012-ST.
It is submitted that the Commissioner has dropped the demand for construction undertaken for ICAI considering it to be a Government authority and covered by exemption Notification No.25/2012-ST. The Commissioner has also relied upon the decision of M/s. ShapoorjiPaloonji& Company Pvt. Ltd. reported at 2016 (42) STR 681.It is submitted that the decision relied upon by the Commissioner is confirmed by the Hon'ble Supreme Court vide a detailed decision reported at 2023 (79) GSTL 145 whereby the Hon'ble Supreme Court held that institutes like IIT Patna and NIT were set up under Indian Institutes of Technology Act, 1961 and National Institutes of Technology Act, 2007 and such institutes are a governmental authority and hence services provided to such institutes are exempt from payment of tax under Notification Nos.2/2014-ST and 25/2012-ST. Furthermore, the respondent submits that the ICAI is a body established under the Chartered Accountants Act, 1949 enacted bythe Parliament of India and the Ministry of Corporate Affairs, Government of India exercises absolute control over it, therefore it fits the definition of governmental authority and hence services provided to the ICAI are exempt from payment of service fax under Notification No.25/2012-ST.
(B)Whether services provided to Rajkot Municipal Corporation for construction of community hall and auditorium are exempt from payment of services tax. It is submitted that the Commissioner has dropped the demand for the construction services provided to Rajkot Municipal Corporation on the grounds that the community hall and auditorium which are made by the respondent for RMC are exempt from the payment of service tax inasmuch as the auditorium and community hall are not for the purpose of commerce, Industry or business profession and hence such
5|Page ST/11083/2018-DB construction is exempt from payment of service tax under Notification No.25/2012-ST by Sr. No.12(a).It is submitted that Sr. No.12(a) exempts services provided to government or a local authority or a government authority by way of construction, erection, commissioning, installation etc. for a civil structure or any other original works meant for use other than for commerce, industry or any other business profession. The Commissioner has rightly given benefit of such entry to the respondent.However, without prejudice to the exemption notification being present, the definition of commercial or industrial construction service and works contract service itself exempts construction which is undertaken for a use which is non commercial in nature. : Commercial or industrial construction" means-
(a)construction of a new building or a civil structure or a part thereof; or
(b) construction of pipeline or conduit; or
(c) completion and finishing services such as glazing, plastering, painting, floorand wall tiling, wall covering and wall papering, wood and metaljoinery andcarpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure, or
(d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is -
(i) used, or to be used, primarily for; or
(ii) occupied, or to be occupied, primarily with; or
(ii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams;".
65(105)(zzzza) (works Contract):-
Explanation. - For the purposes of this sub-clause, "works contract"
means a contact wherein, -
(i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and
(ii) such contract is for the purposes of carrying out, -
(a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating.
ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or
(b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry;"
Therefore, even in absence of Notification No.25/2012-ST, the mere fact that the auditorium and community hall are not used for commerce and industry but are used for social objective, would itself take them out of the ambit of payment of service tax under the categories of "commercial or industrial construction"
6|Page ST/11083/2018-DB Services & "Works Contract" Services. Therefore, the impugned order does not call for any interference by this Hon'ble Tribunal.
(C) Whether construction services provided to GIDC for construction of engineering college is eligible for exemption from payment of service tax.
It is submitted that the Commissioner has dropped the demand advancing the benefit of Notification No.25/2012-ST while holding that GIDC is a governmental authority and the engineering college is for the purpose of education. Therefore it is an essential function of the municipality under Article 243W and hence the benefit of Notification No.25/2012-ST is available to the respondent. It is submitted that the Commissioner is correct in advancing the benefit of Notification No.25/2012-ST inasmuch as GIDC fits the definition of governmental authority inasmuch as it is set up by the Gujarat Industrial Development Act and is controlled by the Government of Gujarat. Furthermore, education is also a subject mentioned under Article 243W (12th Schedule) and hence the impugned order does not call for any Interference.
Without prejudice to the Commissioner advancing the benefit of Notification No.25/2012-ST to the respondent, it is submitted that construction of educational institute whether for government or even for a private party is considered to be exempt from payment of service tax. It is a settled legal position that educational institutes are not considered as commercial in nature and hence the definition of commercial or industrial construction services or works contract services which have its own exclusion which states that when the construction is undertaken for non commercial purposes, then no service tax is payable under such heads.
The Hon'ble Tribunal in the case of M/s NJ DEVANI BUILDERS PVT LTD reported at 2023 (2) TMI 782 & M/s. Harsh Constructions Pvt. Ltd. reported at 2014 (35) STR 617 held that for construction to be levied to service tax under commercial or industrial construction service or under works contract service, the same has to be used for commerce or industry. In other words, both the service categories namely commercial or industrial construction services and the works contract service, exclude the construction of a new building or a civil structure
7|Page ST/11083/2018-DB when done for noncommercial purposes. The Hon'ble Tribunal in the case of Jyoti Sarup Mittal reported at 2017 (3) GSTL 478 held thatconstruction activity done for universities like constructing hostel, staff quarters etc. would be in the nature of noncommercial activities and hence would not be leviable to service tax. The Hon'ble Tribunal in the case of M/s. Era Infra Engineering Pvt. Ltd. reported at 2018 (19) GSTL 52 held that construction of hostel for NIT Calicut would not be leviable to service tax inasmuch as the hostel cannot be considered as a building which is used for business, commerce or commercial building. Therefore, it is a settled legal position that for the construction activity to be taxable under the commercial or industrial construction service or works contract service, the activity of construction should have been done primarily for the civil structure to be used in commerce or industry. In the facts of the present case, since the construction meant for GIDC is for making an engineering college, the activity is outside the levy of Service Tax.
The Hon'ble High Court of Madras in the case of M/s. G. Ramamoorthi Constructions (1) Pvt. Ltd. reported at 2015 (40) STR 632 also held that the construction service for hostel and educational institutions cannot be considered as commercial in nature and hence the same cannot be subjected to service tax. The same proposition is upheld by the Hon'ble Rajasthan High court in the case of M/s Jatan Construction reported at 2019 (24) G.S.T.L. 552.
4. We have carefully considered the submission made by both the sides and perused the records. In the present revenue‟s appeal issue to be considered is whether the institution to which the respondent has provided the construction service are Government Authority in terms of Notification No. 25/2012-ST, Serial No. 12(a) and consequently whether the respondent have been rightly allowed the exemption by the adjudicating authority. We find that the appellant have provided the construction service to the following institutions:
(1) Indian Chartered Accountant Institute (ICAI) (2) Rajkot Municipal Corporation (3) GIDC for construction of Engineering College at Navsari
8|Page ST/11083/2018-DB
5. In respect of the above institution, whether the same are Government Authority for the purpose of granting Exemption Notification No. 25/2012-ST we refer to the relevant exemption entry No. 12 of Notification 25/2012-ST which reads as under:-
"12. Services provided to the Government, a local authority or a repair, governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, maintenance, renovation, or alteration of -
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;"
The definition of term 'Governmental Authority' reads as under:
"17.3 Further, the definition of the term "governmental authority has sinc been amended, the definition of the teNoification No. 02/2014-ST dated 30- 1-2014, and the same reads as under:
"(s) "governmental authority" means an authority or a board or any other body:
(i) Set up by an Act of Parliament or a State legislature; or
(ii) Established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;"
From the above exemption entry, it is clear that any construction service provided to the Governmental Authority is exempted under Notification No. 25/2012-ST. The issue that whether the service recipients as mentioned above are Governmental Authority or not, we find that in case of ICAI, it is established under Chartered Accountant Act, 1949 enacted by Parliament of India and Government of India, Ministry of Corporate Affairs and the same is under absolute control of the Government, therefore, the ICAI clearly falls under the term Governmental Authority.
6. As regard the Rajkot Municipal Corporation, to whom the construction service was provided by the respondent, it is a local body of government and the Serial No. 12A clearly provides exemption to the Municipal Corporation which is a part of the Government.
As regards, GIDC, i.e. Gujarat Industrial Development Corporation, is a department of State Government for which the respondent has constructed an Engineering College, therefore, the service recipient M/s GIDC being a governmental authority thus, the construction service is
9|Page ST/11083/2018-DB exempted. Moreover, the nature of construction is for Engineering College which is education of this reason also, the same is not taxable. The identical issue that whether the said Governmental Authority are exempted from service tax has been considered in various following judgments:
Shapoorji palloonji & Company Pvt Ltd. 2023 (79)GSTL 145 (SC) "Analysis
14.Before we commence our analysis, it would be apt to juxtapose the relevant clauses from the Exemption Notification and the Clarification Notification for facility of appreciation:
EXEMPTION CLARIFICATION
NOTIFICATION NOTIFICATION
"governmental "governmental
authority" authority" means
means a board, an 2(s) authority
2(s) or an or a board or any
authority or any other body;
other body
established with (i) Set up by an Act
90% or more of Parliament or a
participation by State Legislature;
way of equity or or
control by
Government and
(ii) established by
set up by an Act
Government,
of the
Parliament or a
State Legislature with 90% or more
to carry out any participation by
function way of equity or
entrusted to a control, to carry
municipality out any function
under article entrusted to a
243W of the municipality
Constitution; under article
243W of the
Constitution;
15.Having read the two definitions, first and foremost, it is necessary to
ascertain the objective behind the Clarification Notification which amended the Exemption Notification and re-defined "governmental authority". A bare perusal of the Exemption Notification reveals that the exemption therein was only extended to those entities, viz. board or authority or body, which fulfilled the three requisite conditions, i.e. : (a) having been established with 90% or more participation by way of equity or control by Government, (b) set up by an Act of the Parliament or a State Legislature, and (c) carrying out any function entrusted to a municipality under Article 243W of the Constitution. It is evident that the scope of the exemption was severely restricted to only a few entities.
Although the reason for re-defining "governmental authority" has not been made available by the appellants, we presume that unworkability of the scheme for grant of exemption because of the restricted definition of "governmental authority" was the trigger therefor and hence, the scope of the exemption was expanded to cover a larger section of entities answering the definition of "governmental authority". An amendment by way of the Clarification Notification was, therefore, introduced which expanded the definition of "governmental authority" and widened the exemption base for service tax to be provided even to an authority or a board or any other body, set up by an Act of Parliament or a State Legislature without the condition of having been established with 90% or more participation by way of equity or control by Government to carry out any function entrusted to a municipality under Article 243W of the Constitution.
16.While the aforesaid interpretation of amended clause 2(s) has been upheld by the Patna High Court, the appellants have countered the same by submitting that the amended definition of "governmental authority" as in clause 2(s) should be interpreted in a manner so as to make the long line under clause 10 | P a g e ST/11083/2018-DB 2(s) applicable to both sub-clause (i) and sub-clause (ii). In other words, as per the appellants, to qualify as a "governmental authority" under clause 2(s)(i), such authority, board or body must not only be a statutory authority set up by an Act of Parliament or a State Legislature but must also have 90% or more participation of the Government by way of equity or control to carry out any like function that a municipality under Article 243W of the Constitution is entrusted to discharge.
17.We have no hesitation to disagree with the latter interpretation sought to be placed by the appellants, for the reasons that follow.
18.InSuperintendent & Legal Remembrancer, State of West Bengal v. Corporation of Calcutta [(1967) 2 SCR 170], a nine-judge Bench of this Court, relying upon Craies' On Statute Law (6th edn.), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal reading does not lead to absurd construction, the necessity for employing rules of interpretation disappears and reaches its vanishing point.
19.This Court in Union of India &Ors. v. Ind-Swift Laboratories Ltd. [(2011) 4 SCC 635 = 2011 (265) E.L.T. 3 (S.C.)= [2011] 30 STT 461 (SC)], held that harmonious construction is required to be given to a provision only when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous.
20.What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [(1961) 2 SCR 189]. The relevant passage therefrom reads as under :
........ In interpreting a taxing statute, "10. equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency."
21.It is a well-established principle of statutory interpretation that any authority, entrusted with the function of legislating, legislates for a purpose; it can, thus, safely be assumed that it will not indulge in unnecessary or pointless legislation. This Court, in Utkal Contractors & Joinery (P.) Ltd. v. State of Orissa [(1987) 3 SCC 279], lucidly explained thus :
........ It is again important to remember that "9. Parliament does not waste its breath unnecessarily. Just as Parliament is not expected to use unnecessary expressions, Parliament is also not expected to express itself unnecessarily. Even as Parliament does not use any word without meaning something, Parliament does not legislate where no legislation is called for. Parliament cannot be assumed to legislate for the sake of legislation; nor can it be assumed to make pointless legislation. Parliament does not indulge in legislation merely to state what it is unnecessary to state or to do what is already validly done. Parliament may not be assumed to legislate unnecessarily."
22.Having noticed some of the precedents in the field of interpretation of statutes, we now move on to a little bit of English grammar. The word "or" as well as the word "and" is a conjunction; and it is well known that a conjunction is used to join words, phrases, or clauses. On how the conjunctions "or" and "and" are to be read, guidance could be drawn from authoritative texts and judicial decisions. As per Justice G.P. Singh's Principles of Statutory Interpretation, the word "or" is normally disjunctive while the word "and" is normally conjunctive. In English law, the position is clear as crystal, as explained by Lord Scrutton in Green v. Premier Glynrhonwy Slate Co. [(1928) 1 K.B. 561, page 569] that one does not read "or" as "and" in a statute unless one is obliged, because "or" does not generally mean "and" and "and" does not generally mean "or".
23.When the meaning of the provision in question is clear and unambiguous by the usage of "or" in clause 2(s), there remains no force in the submission of Ms. Bagchi that "or" should be interpreted as "and". In our opinion, the word "or" employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word "or" in clause 2(s) clearly appears to us to have been used to reflect the ordinary and 11 | P a g e ST/11083/2018-DB normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Jeyaram Educational Trust v. A.G. Syed Mohideen [(2010) 2 SCC 513], where it was held thus :
It is now well settled that a provision of "11. a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation, the court should remember that it is not the author of the statute who is empowered to amend, substitute or delete, so as to change the structure and contents. A court as an interpreter cannot alter or amend the law. It can only interpret the provision, to make it meaningful and workable so as to achieve the legislative object, when there is vagueness, ambiguity or absurdity. The purpose of interpretation is not to make a provision what the Judge thinks it should be, but to make it what the legislature intended it to be."
24.In the present case, the word "or" between sub-clauses (i) and (ii) indicates the independent and disjunctive nature of sub-clause (i), meaning thereby that "or" used after sub-clause (i) cannot be interpreted as "and" so as to tie it with the condition enumerated in the long line of clause 2(s) which is applicable only to sub-clause (ii).
25.Applying a different lens, let us test the worth of Ms. Bagchi‟s submission in the light of the punctuations in clause 2(s). It has been held by a Bench of nine Hon‟ble Judges of this Court in KantaruRajeevaru v. Indian Young Lawyers Association &Ors. [(2020) 9 SCC 121, para 18] that when a provision is carefully punctuated and there is doubt about its meaning, weight should undoubtedly be given to the punctuation; however, though a punctuation may have its uses in some cases, but it cannot certainly be regarded as a controlling element and cannot be allowed to control the plain meaning. While so observing, this Court considered several decisions as well as the punctuation comma in the relevant provision of the Supreme Court Rules, 2013.
26.What follows is that punctuation, though a minor element, may be resorted to for the purpose of construction.
27.In the present case, the use of a semicolon is not a trivial matter but a deliberate inclusion with a clear intention to differentiate it from sub-clause (ii).
Further, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub- clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word "or", has established it as an independent category, thereby making it distinct from sub- clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word "and" and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define "governmental authority" whichever way it wished; however, "governmental authority" was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret "or" as "and" so as to allow the alternative outlined in clause 2(s) to vanish.
28.Let us consider the problem from a different angle. The revised definition of "governmental authority" and the few punctuations in the definition (two semicolons and two commas) and the conjunction „or‟ have been noticed above. Literally read, the conjunction „or‟ between sub-clauses (i) and (ii) clearly divides the two clauses in two parts with the first part completely independent of the second part. The first part is by itself complete and capable of operating independently. A construction leading to an anomalous result has to be avoided and to so avoid, it has to be held that the long line of clause 2(s) starting with "with 90%" and ending with "Constitution" qualifies sub-clause (ii); and, if the conjunction „or‟ is to be read as „and‟, meaning thereby that the portion "with 12 | P a g e ST/11083/2018-DB 90% ... Constitution" has to be read as qualifying both sub-clauses (i) and (ii), then the intention of redefining "governmental authority" would certainly be defeated. As discussed earlier, the purpose for which "governmental authority"
was re-defined must have been to make it workable. We cannot, therefore, resort to a construction that would allow subsistence of the unworkability factor. Assuming what Ms. Bagchi contended is right, it was incumbent for the appellants to bring to our notice, if not by way of pleading, but at least with reference to the relevant statutes, which of the particular authorities/boards/bodies are created by legislation - Central or State - "with 90% or more participation by way of equity or control by Government". Each word in the definition clause has to be given some meaning and merely because promoting educational aspects is one of the functions of a municipality in terms of Article 243W of the Constitution read with Schedule XII appended thereto is no valid argument unless equity or control by the Government, to the extent of 90%, is shown to exist qua the relevant authority/board/body. Incidentally, neither is there any indication in the petition nor has Ms. Bagchi been able to disclose the identity of any such authority/board/other body which is covered by her argument. No such identified authority/board/body covered by the aforesaid construction of the definition of "governmental authority" in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL.
29.We need not draw guidance from any of the decisions cited by Ms. Bagchi, except one, on the question of construction of the relevant clause because none of those decisions had the occasion to deal with the issue emanating from the Exemption Notification and the Clarification Notification that we are tasked to consider.
30.Ms. Bagchi heavily relied on the decision of a five-judge Bench of this Court in Dilip Kumar (supra) to urge that in case of any ambiguity in interpreting an exemption notification, the interpretation that favours the revenue must be adopted; also, the burden of proving applicability of the exemption notification would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. At the outset, we record that there is absolutely no quarrel with the proposition laid down therein. We, however, reject the contention of Ms. Bagchi based on Dilip Kumar (supra) because the ratio is not applicable to the facts and circumstances of this case. This, for the simple reason, that there exists no ambiguity insofar as the interpretation of clause 2(s) is concerned. We are endorsed in our opinion by the Latin maxim quoties in verbisnullaestambiguitas, ibinullaexpositio contra verbaexpressafiendaest, which means that when there is no ambiguity in the words, then no exposition contrary to the words is to be made. It is, therefore, clear as a sunny day that there arises only one plausible construction of clause 2(s) which is the one the Patna High Court adopted, and which we are inclined to uphold.
31.Ms. Bagchi had submitted that the impugned judgment broadens the scope of the exemption to include vast number of statutory bodies; therefore, unfairly burdening the exchequer. We observe that the authority having the competence to issue a notification completed its job by re-defining "governmental authority" and now it is a task entrusted to the courts to interpret the law. It is, at this juncture, important to notice the law laid down by this Court, speaking through Hon‟ble O. Chinnappa Reddy, J. in GirdhariLal& Sons v. BalbirNathMathur [(1986) 2 SCC 237]. The position of law was affirmed in the following terms :
Where different interpretations are likely "6. to be put on words and a question arises what an individual meant when he used certain words, he may be asked to explain himself and he may do so and say that he meant one thing and not the other. But if it is the legislature that has expressed itself by making the laws and difficulties arise in interpreting what the legislature has said, a legislature cannot be asked to sit to resolve those difficulties. The legislatures, unlike individuals, cannot come forward to explain themselves as often as difficulties of interpretation arise. So the task of interpreting the laws by finding out what the legislature meant is allotted to the courts. Of course, where words are clear and unambiguous no question of construction may arise. Such words ordinarily speak for themselves. Since the words must have spoken as clearly to legislators as to judges, it may be safely presumed that the legislature intended what the words plainly say. This is the real basis of the so-called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges."
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32.Keeping the above-said ratio in mind, an interpretation of the relevant provision resulting in the expanded scope of its operation cannot in itself be sufficient to attribute ambiguity to the provision.
33.To make a statute workable by employing interpretative tools and to venture into a kind of judicial legislation are two different things. Merely because the statute does not yield intended or desired results, that cannot be reason for us to overstep and cross the LakshmanRekha by employing tools of interpretation to interpret a provision keeping in mind its outcome. Interpretative tools should be employed to make a statute workable and not to reach to a particular outcome.
Conclusion
34.For the reasons aforesaid, we find no merit in these appeals. The impugned judgments and orders are upheld and the appeals are dismissed, without any order for costs."
NJ Devani Builders Pvt. Ltd. vide Final Order No.
12227/2023 dated 06.10.2023
"The issue involved in the present appeal is that the appellant has provided services of construction of hostel building for IIM, Ahmedabad and for PanditDeendayal Petroleum University, Gandhinagar. The department in the impugned order is of the view that such service is covered under Works Contract service therefore the claim of Commercial and Industrial Construction Services by the appellant as well as exemption under various sub-headings of the service was untenable. As against this, the learned advocate for the appellant takes us through various judgments to point out that the issue is no longer res-integra and has been decided in various matters. He seeks to rely upon the following judgments:-
(a) Harsh Construction Pvt. Limited vs. CCE, Nasik - 2014(35) STR 617 (Tri.-Mumbai)
(b) JyotiSarup Mittal vs. CCE, Delhi-l - 2017(3) GSTL 478 (Tri.-Del.)
(c) Era Infra Engg. Pvt. Limited vs. CST, Delhi-l - 2018(19) GSTL 52 (Tri.-Del.)
(d) G. Ramamoorthi Construction (1) P. Limited vs. Comm (Adj.), Coimbatore - 2015(40) STR 632 (Mad.)
2. Accordingly he submits that the services that are provided to educational institutions cannot be termed as service provided for Commercial and Industrial Construction Services as has been held in the cases cited supra. Therefore, not only the services are not covered under works contract but also are not commercial services to be covered under Commercial and Industrial Construction Services. Having gone through various judgments we are in agreement with the advocate, as no contrary judgment has been pointed out by the learned AR. The decision relied upon by the Adjudicating Authority was only a prima-facie decision in a stay matter.
3. Accordingly, we are of the view that appeal is allowable. The appeal is allowed with consequential relief."
CGST, Jaipur vs Jatan Construction Pvt. Ltd. 2019 (24) GSTL 552 (Raj.) "...17.1 I have carefully gone through the case records, including defense reply and submissions made during personal hearings.
The issues before me to decide is (I) whether assessee is sub-contractor of M/s. National Building Construction Corporation Ltd. (NBCC)? (II) whether construction activity of P.G. Hostel at SVNIT Surat and ESIC Hospital at Jaipur falls under the category of Works Contract Service? (III) whether service provided by assessee to NBCC is liable to service tax or not? (VI) whether demand is hit by limitation?
14 | P a g e ST/11083/2018-DB 17.2 Before deciding the issues, it is necessary to go into the background of the case. As stated in the brief facts, the officers of the DGCEI Zonal Unit, Ahmedabad, acting on the intelligence, searched the office premises of the assessee at Ajmer and Ahmedabad on 18-7-2011 and resumed certain documents/records. Investigation conducted in the matter revealed that assessee has not paid service tax on two projects. The investigating team observed that two projects being constructed on behalf of NBCC i.e. construction of P.G. Hostel at SVNIT Surat and ESIC Hospital at Jaipur, are liable for payment of service tax. Accordingly SCN, dated 10-9-2012 for demand of service tax of Rs. 5,45,77,175/- was issued by ADG O/O the DGCEI Zonal Unit, Ahmedabad.
17.3 Now I proceed to decide the case on merit. First of all I take up the issue of whether the assessee is sub-contractor of NBCC or [not]. Reliance is placed on letter No. NBCC/AGM/LOA/2009/1208, dated 15-1-2009, written by M/s. NBCC to the assessee, wherein cost of the project, period of construction and other terms and conditions of the agreement were mentioned. The assessee was directed to furnish bank guarantee, insurance coverage and obtaining statutory licenses. The letter written by Sh. A.K. Gupta AGM of NBCC, specifically mentioned that "This letter of award shall form part of the contract agreement. This letter of award is being issued in duplicate. The duplicate copy is to be signed and stamped by the authorized signatory of your company and is to be returned to this office in token of your confirmation and acceptance in full". In this letter the contract was for construction of P.G. Hostel at SVNIT, Surat. The cost of the said project was revised vide letter, dated 12-3-2010. Similar Letter No. NBCC/GM-RBG (E&I) ESIC/Jaipur/2009/1110, dated 3-3- 2009 was for contract for construction of Hospital Building including internal services, External electrical, Fire Fighting, at Jaipur.
17.4 From the above letters, it is evident that assessee made contracts for construction of above two projects with M/s. NBCC and raised running account bills to M/s. NBCC, who made payments. I find that assessee acted as per terms and conditions specified in their letter of agreement and provided specific services as required by M/s. NBCC. I find that assessee acted as sub-contractor of M/s. NBCC.
17.5 Now the question would arise as to under which service the construction activity undertaken by the assessee for two projects will be classified. Whether it is commercial and industrial construction or works contract. I find that assessee vide their letter, dated 23-8-2011, in their reply to show cause notice and during personal hearings have contested that their construction activity do not fall under the category of works contract service & it exclusively falls under 65(105)(zzq) i.e. construction service. Since the projects, pertained to hospital and hostel, belonging to government department, the same are neither commercial nor industrial, but are for general public utility and charitable in nature. Therefore, they are exempted from levy of service tax. I find that criteria to classify the service under any specific category will depend upon the terms and conditions of the contract, dated 15-1-2009 and 3-3-2009 wherein it is specifically mentioned that "with reference to your tender for the above mentioned work, we are pleased to accept your tender for the amount, worked out on the basis of rates quoted by you on the Bill of Quantities of the tender documents on terms and conditions referred. It is also requested to mobilize immediately your site personnel plant and equipments and other resources so that work can be started as per schedule." I find that nature of contract, their terms and conditions, the running account bills raised by the assessee for payments of the work done, the annual payment details with cheque numbers, which shows the amount for VAT on work contract, all these facts leads to the conclusion that the activity undertaken by them fall under works contract service. I draw my inferences from the definition of service given under section 65(105) (zzzza) of the Finance Act 1994 for works contract which reads as "to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.
17.6 Explanation. - For the purpose of this sub-clause, "works contract"
means a contract wherein (I) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for carrying out-
(a) Erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise. Installation of electrical and electronic devices, plumbing drain laying or other 15 | P a g e ST/11083/2018-DB installations for transport of fluids, Heating, ventilation or air-
conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water, proofing, lift and escalator, fire escape staircases or elevators; or
(b) Construction of new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or -
(c) Construction of a new residential complex or a part thereof; or
(d) Completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation of (d) and (e) above; or
(e) Turnkey projects including engineering, procurement and construction or commissioning (EPC) projects.
4. He contended that the Tribunal has seriously committed an error in taking a view inspite of the decision of Banglore Tribunal in Ramky Infrastructure Ltd. v Commr. of Service Tax, Hyderabad, reported in 2013 (29) S.T.R. 33 (Tri. Bang.) wherein it has been held as under :-
10.1 Whether, in the case of each of the two JVs, the service provided to the Government of Andhra Pradesh is classifiable as "WCS" has to be determined from the nature of the relevant contracts as understood by the parties thereto as also from the scope of the works executed under the contracts. Of-course, this exercise has to be undertaken with reference to the definition of "works contract" embodied in Explanation to Section 65(105)(zzzza) of the Finance Act, 1994.
10.12 The definition of "commercial or industrial construction service"
excludes services provided in respect of certain specified items including "dams" Similarly the definition of "site formation and clearance, excavation and earth moving and demolition" excludes services provided in relation to certain specified items including "irrigation". Therefore, according to the counsel for the appellants, any service provided in relation to "dams" and "irrigation"
should be deemed to have been excluded from the purview of "works contract service" as well. There is no warrant for deeming so inasmuch as every taxable entry needs to be understood with reference to the language used in such entry and, accordingly, a given service has to be classified, which is the mandate of sub-section (1) of Section 65A of the Finance Act, 1994. We have not found anything in the text of the definition of "works contract" to indicate that turnkey/EPC projects for irrigation are excluded from the ambit of taxable service of works contract. With regard to "dams", we have already expressed our views in para (10.6) of this order. As rightly submitted by the learned Special Consultant for the Department, there is no room for any intendment or assumption or presumption and, where the words of the statute are plain and clear, there is no room for applying any of the principles of interpretation. In this context, the reliance placed by the Special Consultant on the decision of the Apex Court in Grasim Industries case is found to be apposite.
10.13 Clause (e) of the definition of works contract--turnkey projects including engineering, procurement and construction or commissioning (EPC) projects--clearly conveys the legislative intent underlying the definition of "works contract" in relation to turnkey projects. It does not exclude EPC projects for irrigation, nor does it discriminate between EPC projects for commercial/industrial purposes and those for non-commercial/non-industrial purposes, nor between EPC projects of Government departments/agencies and private entities. What does not figure in the plain language of the entry cannot be read into it by this Tribunal.
4.1 He contended that the judgment which has been sought to be relied upon is subject matter of SLP before the Supreme Court.
5. However, in our considered opinion, the Tribunal clearly observed as under :
7. Admittedly, in the present case the construction activity of the appellant is with reference to student's hostel and the public hospital. These are non-
commercial buildings. Accordingly, these are excluded from tax liability under works contract service.
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6. It is thus clear that the hostel which was constructed was a girls hostel and hospital which was need of the Jaipur was constructed. In that view of the matter, it was not commercial building as per the language used and the activities neither fall under commercial activities nor industrial activities, it is purely a social activity where the girls hostel is constructed for girls students in city of Surat and hospital in Jaipur.
7. Thus, we are in complete agreement with the view taken by the Tribunal. No substantial question of law arises in the appeal.
8. The appeal stands dismissed."
7. In view of above judgments cited by learned counsel for the respondent, there is no doubt that the respondent have provided construction service to the Governmental Authority, therefore, the said construction service is exempted under Notification 25/2012-ST. The learned Commissioner has thoroughly examined the legal provision related to the Exemption Notification as well as the definition of Governmental Authority and came to the correct conclusion that the service by the respondent was provided to the Governmental Authority and therefore, allowing the exemption notification set aside the demand. We completely agree with the view taken by the learned Commissioner in adjudication order, therefore, there is no infirmity in the said order. Accordingly, we uphold the order-in-original and dismiss the Revenue‟s appeal.
(Order pronounced in the open court on 02.12.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Neha