Custom, Excise & Service Tax Tribunal
R Rami Reddy & Co vs Tirupati - Cgst Commissionerate on 9 January, 2026
1 Appeal No. ST/27071/2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. - I
Service Tax Appeal No. 27071 of 2013
(Arising out of Order-in-Original No.3/2013 (S.Tax) dated 28.01.2013 passed by
Commissioner of Central Excise, Customs & Service Tax, Tirupati)
M/s R Rami Reddy & Co., .. APPELLANT
D.No.75J,
SD Road,
Tirupati,
Andhra Pradesh - 517 501.
VERSUS
Commissioner of Central Excise, .. RESPONDENT
Customs & Service Tax Tirupati Commissionerate, 9/86-A, Amaravathi Nagar, West Church Compound, Tirupati, Andhra Pradesh - 517 502.
APPEARANCE:
Shri Ch. Sumanth, Advocate for the Appellant.
Shri V. Srikanth Rao, Authorized Representative for the Respondent.
CORAM: HON'BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE Mr. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30020/2026 Date of Hearing: 07.08.2025 Date of Decision: 09.01.2026 [ORDER PER: ANGAD PRASAD] M/s Rami Reddy & Co., (hereinafter referred to as appellant) has filed this appeal against the Order-in-Original No. 3/2013 (S.Tax) dated 28.01.2013 (impugned order) passed by Commissioner of Central Excise, Customs & Service Tax, Tirupati.
2. The fact of the case is, the appellant is engaged in laying of roads and construction of public buildings, such as educational, health institutions and religious buildings. The appellant undertook various constructions related to contract in the capacity of both contractor as well as sub-contractor for non- 2 Appeal No. ST/27071/2013 commercial and non-industrial purposes. The appellant undertook works in the capacity of contractor for construction/ laying of new roads and certain other construction related works for M/s Tirumala Tirupati Devasthanam (TTD) and the trust managed by the Holy Venkateshwara Temple. The TTD trust is also involved in various social, religious and educational activities for the benefit and upliftment of the Tirumala region and for the society at large. TTD is not for profit society and is established under State enactments solely for the aforesaid religious and charitable purposes. The appellant undertook the following construction work for TTD:
(i) Construction of Girls Hostel at SVIMS, Tirupati.
(ii) Beautification of Narayanagiri Gardens & Alwar water tank at Tirumala from Walden Properties Ltd.,
(iii) Construction of S.V. Ayruvedic Hospital, Tirupati.
(iv) Construction of Pilgrim Shelter at Tirumala.
(v) Construction of footpath for queue line at Tirumala.
(vi) SMC cottage improvement work, Group-1 and Group-2 at Tirumala.
3. The appellant, as a sub-contractor for M/s GKC Projects Ltd., on back- to-back basis undertook a project for development and improvement of the land for agricultural purpose, viz. land development, excavation and filling of agricultural land at Anantapur. This contract was awarded to the main contractor by the Government of Andhra Pradesh. The works are meant for non-commercial purpose and non-industrial purpose, the appellant was under the bonafide belief that they are not liable for payment of Service Tax. Accordingly, the appellant has not charged any Service Tax on the consideration received by them. The appellant states that they have paid VAT on the amounts received by them from TTD for various construction works undertaken by them on the goods portion involved in the execution of these projects.
3 Appeal No. ST/27071/2013
4. The Department issued a Show Cause Notice dated 31.05.2012 demanding payment of Service Tax of Rs. 4,66,82,542/- for the period from April 2007 to March 2011 on the work undertaken by the appellant during the period in dispute under the category of 'Works Contract Services' (WCS).
5. The Adjudicating Authority has ordered following demands under 'Works Contract Service' and under 'Site Formation and Clearance, excavation & earth moving and demolition services' as detailed below:
S. Description of Work Service Tax Demand
No. Cateogry confirmed
(Rs.)
1. Construction of Girls Hostel at Works contract 24,40,773
SVIMS services
2. Construction of 2nd floor in 22,61,475
Ayurvedic Hospital
3. Construction/renovation of SMC 8,92,639
cottages
4. Reworking of agricultural land Site Formation and 11,76,158
Clearance service
TOTAL 67,71,045
6. The Adjudicating Authority has dropped the demand in respect of the following activities undertaken by the Appellant:
a) Beautification of Narayanagiri Gardens and Alwar Water tank at Tirumala
b) Construction of Pilgrim shelter at Tirumala
c) Construction of footpath for 'Q' line at Tirumala
d) Construction of road activities undertaken on sub-contract basis for M/s. GKC Projects Limited.
7. Hence, appellant filed this appeal before the Tribunal against demands and penalties.
8. Learned Counsel for the appellant submits that TTD is a conglomeration of temples established under an act of the State Legislature i.e., The Andhra Pradesh Charitable and Hindu Religious Institutions & Endowments Act, 1987. The TTD is purely religious and charitable organizations which endeavour to fulfil the social, economic, religious and environmental needs of the people, especially the needy. For this purpose, TTD has undertaken several activities and has initiated different schemes in 4 Appeal No. ST/27071/2013 various areas. The entire activity carried on by TTD is solely for non- commercial purposes.
A) Construction of Girls Hostel at the Sree Venkateswara Institute of Medical Sciences, Tirupathi (SVIMS)
9. Learned Counsel for the appellant submits that the SVIMS was established in 1993 under the aegis of Tirumala Tirupati Devasthanams with a view to providing quality medical care at a nominal cost to the poor and needy. In 1995, SVIMS became a University by an ACT of Andhra Pradesh State. In 2006, the Government of India included SVIMS as one of the institutions for up-gradation at par with All India Institute of Medical Sciences (AIIMS), New Delhi. SVIMS was constituted for a charitable and educational purpose for a non-commercial and non-industrial purpose. The hostels are provided to students who are eligible for scholarships by virtue of getting the top ranks in the competitive examinations conducted by the Institute. The Institute provides these hostels on a very nominal charge of Rs. 300/- per month to students in order to promote education and encourage them in their studies. The nominal charge is initially paid by the students, are subsequently reimbursed by the Government of AP to the students as they are eligible for scholarship. The hostels are therefore, provided on free of cost basis and without any intent to carry on any business. Further, an activity which is undertaken with no intention to make profit, but for charity, cannot be said to be "Commercial" in nature. The CBEC had vide its circular F. No. 137/71/2006-CX.4 dated 01.11.2006 has clarified that educational institutions are not commercial concerns and no service tax can be levied on it. Learned Counsel for the appellant relied on of NJ Devani Builders P. Ltd. v. CCE, 2023 (10) TMI 1450 - CESTAT Ahem & Harsh Constructions Pvt. Ltd. v. Commissioner of Central Excise & Customs, Nashik, 2014 (35) S.T.R. 617 (Tri.-Mumbai) where in, held that for 5 Appeal No. ST/27071/2013 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 when done for non-commercial purposes. The Tribunal New Delhi in the case of Jyoti Sarup Mittal v. CCE, 2017 (3) G.S.T.L. 478 (Tri. - Del.) held that construction activity done for universities like constructing hostel, staff quarters etc. would be in the nature of non-commercial activities and hence would not be leviable to service tax. The Tribunal New Delhi in the case of Era Infra Engineering Pvt. Ltd. v. C.S.T., 2018 (19) GSTL 52 (Tri. - Del.) held that construction of hostel for NIT Calicut would not be leviable to Service Tax, in as much as the hostel cannot be considered as a building which is used for business, commerce or commercial building. Therefore, 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 present case, since the construction meant for SVIMS is for making the girls hostel of the medical college, the activity is outside the levy of Service Tax. The Hon'ble High Court of Madras in the case of G. Ramamoorthy Constructions (I) Pvt. Ltd. v. Commissioner, 2015 (40) S.T.R. 632 (Mad.) 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. Learned Counsel relied on the following decisions:
(i)CCE v. Vishnu Saran & Co., 2025 (5) TMI 1829 - CESTAT Allahabad
(ii) Katira Construction Ltd v. CCE, 2024 (11) TMI 349 - CESTAT Ahmedabad 6 Appeal No. ST/27071/2013
(iii) R.R. Thulasi Builders (I) P. Ltd. v. CGST & CE, 2024 (7) TMI 1067 -
CESTAT Chennai
(iv) Vij Constructions Private Limited v. CCE, 2018-VIL-1312-CESTAT-DEL- ST
(v) CCE v. B.J. Shirke Construction Technology Pvt Ltd., 2019-VIL-115- BOM-ST B) Construction of Second Floor over SV Ayurvedic Hospital for TTD
10. Learned Counsel for the appellant submits that SV Ayurvedic Hospital provide medical facilities to various people free of cost, making medical facilities available to all sections of the people. The sole objective of construction of the hospital is, to provide medical facilities free of cost, so that the medical facilities are available to people of financially weaker sections of society. The appellant furnished the Certificate issued by the Resident Medical Officer, S.V. Ayurvedic Hospital, TTD Tirupati stating that the hospital building is not constructed for any commercial purpose, and no consultant fee is charged from the patients. Learned Counsel for the appellant relies on the decision of Shapoorji Pallonji & Co Ltd v. CCE, 2018 (5) TMI 487 - CESTAT Mumbai, wherein it was held that construction of a building for use as hospital by a charitable organization cannot be considered as a 'commercial' activity. Further, reliance is placed on the decision of Manisha Projects Pvt Limited v. CCE, 2019 (24) G.S.T.L. 741 (Tri. - All.), wherein it was held that onus is on the revenue to prove that the construction of hospital used by Manyavar Kanshiram Hospital was being used for or to be used for making profit. In the absence of such enquiry by the revenue, the benefit of Circular dated 17.09.2004 could not be denied. Reliance is also placed on the following decisions:
(i)Modern Engineering Constructions, 2018-TIOL-3895-CESTAT-MAD
(ii) CCE v. Jatan Construction, 2019 (24) G.S.T.L. 552 (Raj).
(iii) G. Ramamoorthy Constructions (I) Pvt. Ltd. v. Commissioner - 2015 (40) S.T.R. 632 (Mad.) 7 Appeal No. ST/27071/2013
(iv) Harsh Constructions Pvt. Ltd. v. Commissioner of Central Excise & Customs, Nashik, 2014 (35) S.T.R. 617 (Tri.-Mumbai) C) SMC Cottage Improvement Work undertaken by the Appellant for TTD
11. Learned Counsel for the appellant submits that the appellant had undertaken the work for improvement of SMC Cottages for TTD which are provided to various devotees visiting Tirumala for the darshan and worship of Lord Venketeswara, i.e., for religious purposes on free of cost basis or on a nominal cost basis. The cottages are provided to the devotees during their visits to Tirumala on a very nominal charge of Rs. 50 per day for 24 hours. Such charges are also collected only to meet the maintenance expenses which are incurred by TTD when the rooms are occupied. Thus, the cottages are constructed for non-commercial purpose and are not carried on for any business purpose. Learned Counsel for the appellant submitted that the issue is squarely covered by the decision of this Tribunal in the case of KMV Projects Ltd V. CCE, Hyderabad, 2019 (27) GSTL 388 (Tri. - Hyd.), wherein it was held that construction of guest houses and temple complex (multi- storied complex) for purpose of public use in religious institution fell under exclusion clause of works contract services and tax liability would not arise. D) The Development Work Carried Out On Agricultural Lands.
12. Learned Counsel for the appellant submits that the Activity undertaken by the Appellant for M/s. GKC Projects Limited for development of land for agricultural purposes, the SCN Proposed the demand under the category of WCS, but the demand has been confirmed under 'Site Formation and clearance, excavation and earth moving and demolition services' under Section 65(97a) of the Finance Act. Such a classification in the impugned order travelling beyond the scope of the SCN and the change in category of 8 Appeal No. ST/27071/2013 service is not sustainable. Reliance in the regard is placed on the following decisions:
(i)Purushotham Reddy v. Commr. of Central Tax, 2025 (3) TMI 678 - CESTAT Hyderabad
(ii) Balaji Contractor v. CCE, 2017 (3) TMI 181 - CESTAT New Delhi
(iii) Kalpataru Power Transmission Ltd , 2019 (7) TMI 503 - CESTAT Ahmed
(iv) Goyal & Co Construction Pvt. Ltd, 2023 (7) TMI 1020 - CESTAT Ahmed
(v) Associated Builders & Contractors, 2018 (4) TMI 848 - CESTAT New Del
(vi) Futura Interiors v. CGST & CE, 2018 (10) TMI 403 - CESTAT Chennai
13. Learned Counsel also submits that the work for land development, excavation and filling for agricultural land at Anantapur District as awarded to them by M/s GKC Projects Ltd (main contractor). The scope of work encompasses the removal of overburden on the land and improvement of the land for agricultural purposes. Therefore, the said activities undertaken by the Appellant for agricultural purposes are clearly excluded from levy of service tax. Reliance is also placed on Circular No. B1/6/2005-TRU, dated 27.7.2005.
14. Learned Counsel for the appellant also submits that the matter is interpretational in nature pertaining to classification of service. It is thus submitted that it is settled law that where there is a bona fide interpretation of provisions of law, penalty is not imposable. Reliance is placed on the following judgment:
(i) CCE Vs Reliance Industries Ltd., [2023 (385) E.L.T. 481 (S.C.)]
(ii) Uniflex Cables Ltd. V. CCE, Surat-II, 2011 (271) ELT 161 (SC)]
15. Learned Counsel for the appellant submits that penalties under section 76 and 78 of the Finance Act, 1994 cannot be simultaneously imposed.
16. Learned Counsel for the appellant submits that the appellant was under the Bonafide believe that they are not required to take registration 9 Appeal No. ST/27071/2013 under Service Tax since the construction activities undertaken by them for TTD were non-commercial in nature and thus not leviable to Service Tax. Therefore, benefit of under Section 80 of the Finance Act should be given.
17. Learned Counsel for the appellant submits that the Adjudicating Authority has extended the cum tax benefit under Section 67(2) of the Finance Act, to demands pertaining to (i) Construction/Renovation of SMC Cottages for TTD and (ii) Reworking of Agricultural Land as sub-contractor for GKC Projects. Since, the appellant has not collected service tax from the recipient on (i) Construction of Girls Hostel at SVIMS for TTD and (ii) Construction of 2nd floor in Ayurvedic Hospital for TTD. Thus, cum-tax benefit ought to be extended to the above demands also.
18. Learned Counsel for the appellant submits that the appellant is entitled for the benefit of composition scheme as the impugned order levied/confirmed demand on the entire value of works at the rate of 10.36% without providing for any deduction towards the value of material. However, the impugned order confirmed the demands under the category of WCS. It is submitted that having confirmed the demand under WCS, which undisputed involves transfer of property subject to VAT and the Ld. Commissioner has also deducted the VAT amount paid from the gross amount for arriving at the taxable value, so, towards value of material deduction ought to have provided in terms of Notification No.12/2003. Alternatively, the appellant is also eligible for the benefit of composition scheme by virtue of Notification No.32/2007-ST dated 22.05.2007.
19. Learned AR for the Department reiterates the findings given by the Adjudicating Authority, as well as argued that the agreement between main contractor and appellant was provided that any Central and State taxes on completion of work may be levied and paid. Therefore, appellant is liable to pay Service Tax as decided by Adjudicating Authority. 10 Appeal No. ST/27071/2013
20. Heard Learned Counsel for the appellant Ch. Sumanth and Learned Representative of the Department Shri V. Srikanth Rao and perused the records with their submissions.
21. As far as, construction of girls hostel at the Sree Venkateswara Institute of Medical Sciences, Tirupati (SVIMS) are concerned, the hostels are provided at free of cost and without any intend to carry any business. The hostel are constructed for the benefit of the students in the Shree Venkateswara Institute of Medical Sciences, Tirupati (SVIMS). As per CBEC Circular F.No. 13/21/2006 - CX.4 dated 01.11.2006. It has been clarified that educational institutions are not commercial concerns and no Service Tax can be levied on it.
22. The Co-ordinate Bench, Ahmedabad, in the case of NJ Devani Builders Pvt Ltd., supra, wherein, issue was involved that the services of construction of hostel building for IIM, Ahmedabad and for Pandit Deendayal Petroleum University, Gandhi Nagar. The Tribunal held that the services that are provided to educational institutions cannot be termed as service provided for Commercial and Industrial Construction Services.
23. The Co-ordinate Bench, Mumbai, in the case of Harsh Constructions Pvt Ltd., supra, held that construction of colleges, Government hospitals or Open University cannot be said to be commercial or industrial in nature. Therefore, no any tax liability about non-commercial constructions. The relevant para of the judgment as thus:
"5.2 From the above definitions, especially the underlined portions, it is crystal clear that for a construction to be levied to Service Tax, whether under 'commercial or industrial construction service' or under 'work contract service' the same has to be used for commerce or industry. The construction of colleges, Government hospitals or Open University cannot be said to be commercial or industrial in nature. In other words, at the relevant time, the levy did not cover non-commercial or non-industrial construction (other than residential). Therefore, prima facie, there is merit in the 11 Appeal No. ST/27071/2013 contention of the appellant that they are not liable to Service Tax on the amount of Rs. 5,61,69,307/- received by them. If the department has still any doubt, they can call for the copy of the contract and approved plans for the said constructions to satisfy that they are non-commercial or non- industrial in nature, falling outside the purview of Service Tax levy and the appellant is also directed to submit all the relevant documents in this regard to the department."
24. The Co-ordinate Bench, Delhi, in the case of Jyoti Sarup Mittal, supra, held that construction activity done for universities like constructing hotel, staff quarters etc., would be in the nature of non-commercial activities and hence, would not be leviable to Service Tax. The relevant para of the judgment as follows:
"7. In the instant case, it appears that the entire construction services are meant for educational institutions or for the welfare of the State which are not commercial or industrial in nature. The Board Circular No. 80/2004- S.T., dated 17.09.2004 clarifies the "Constructions Services (commercial and industrial buildings or civil structures)" as under:
"13.2 The leviability of Service Tax would depend primarily upon whether the building or civil structure is 'used, or to be used' for commerce or industry. The information about this has to be gathered from the approved plan of the building or civil construction. Such constructions which are for the use of organizations or institutions being established solely for educations, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government constructions would not be taxable. However, if such constructions are for commercial purpose like local Government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to Service Tax."
It appears that the institutions, being established solely for educations, religious, charitable, health, sanitation, etc., are exempted from the Service Tax, but, when the Government construction is used for commercial or industrial purposes like shops and houses, etc., then the same is within the clutches of the Service Tax."
12 Appeal No. ST/27071/2013
25. Therefore, it is a settled legal position that for the construction activity other than 'Commercial or Industrial Construction Service' is not leviable. In the present case, since, the construction or making the girls hostel of the medical college, thus, the activities outside the levy of Service tax.
26. Construction related to second floor over SV Ayurvedic Hospital for TTD. The hospital building is not constructed for any commercial purpose, and no consultant fee is charged from the patients. In the case of Shapoorji pallonji & Co Ltd., supra, wherein, held that construction of a building for use as hospital by a charitable organization cannot be considered as a 'Commercial' activity.
27. The Co-ordinate Bench Tribunal Allahabad, in the case of Manisha Projects Pvt Ltd., supra, held that if the building or civil structure was not used for or to be used for making profit, then the same are not taxable.
28. As per Circular No. 18/10/2004-S.T. dated 17.09.2004. The relevant para as follows:
"13.2 The leviability of Service Tax would depend primarily upon whether the building or civil structure is 'used, or to be used' for commerce or industry. The information about this has to be gathered from the approved plan of the building or civil construction. Such constructions which are for the use of organizations or institutions being established solely for educations, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government constructions would not be taxable. However, if such constructions are for commercial purpose like local Government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to Service Tax."13 Appeal No. ST/27071/2013
29. Therefore, Health institution which is not for commercial purpose would not be taxable. Therefore, the demand regarding construction of second floor over SV Ayurvedic Hospital for TTD also not sustainable.
30. As far as SMC Cottage Improvement Work undertaken by the appellant for TTD. These cottages are provided to various devotees visiting Tirumala Tirupati for the darshan, charges are collected only for maintenance expenses. Thus, these cottages are constructed for non- commercial purpose, therefore, construction of cottages are not taxable as per above mention circular.
31. Even, this Tribunal in the case of KMV Projects Ltd., supra, held that any construction which is for non-commercial or non-industrial purposes, Service Tax liability under works contract service will not arise. The construction of guest houses and temple complex (multi-storied complex) for the purpose of public use in religious institution, in the absence any further evidence to show that these guest houses are allotted to non- pilgrims as a hotel accommodations services for those visiting the temple, the said services would fall under exclusion clause of work contract services and tax liability does not arise.
32. In view of the above no any tax liability regarding SMC Cottage Improvement Work. Therefore, demand under 'works contract service' is not sustainable.
33. The Adjudicating Authority confirmed the demand on the ground that the agreement between two are provided in the agreement that any Central or State taxes on completion of work may be levied and paid. The Adjudicating Authority mis-read the provision of agreement. It is general provision provided in agreement, it cannot be basis for demand. 14 Appeal No. ST/27071/2013
34. There is another demand in the activity under taken by the appellant for agriculture purposes under 'Site Formation and Clearance, excavation and earth moving and demolition' as defined under Section 65(97a) of the Finance Act, 1994. The demand was made under the category of 'Works Contract Services' in the Show Cause Notice but confirmed in the above mentioned service. Learned Counsel for the appellant submitted that the change in the category of service beyond Show Cause Notice is not sustainable and violative of the basic principle of natural justice.
35. Learned Counsel for the appellant relied on Raghava Estates & Properties Ltd., supra, decided by this bench wherein, it was held that the demand is not legally sustainable. Since, the demand was confirmed under the category of 'construction of complex service or works contract service' while the Show Cause Notice was issued under the category of 'works contract service'. The relevant para of the order as follows:
"14. While the SCN demanded the Service Tax under the category of 'Works Contract Service' for the period 01.06.2007 to 31.03.2011, the Adjudicating Authority has confirmed the demand under the different category i.e., under the category of 'Construction of Residential Complex service' and has also given some justification to come to this conclusion. This would amount to traversing beyond the scope of SCN. This will also amount to non-following of principles of natural justice. The Appellant was never put to notice that the demand is going to be confirmed under the category of 'Construction of complex service'. They were issued notice seeking as to why the demand should not be confirmed under the category of 'Works Contract service'. Therefore, they are defending the demand made under the category of Works Contract, without taking any defence on account of Construction of Complex service. Hence, we take the view that the appellant was not put to notice before the Adjudicating Authority had confirmed the demand under the category of 'Construction of Residential Complex service'. We find that in the case of M/s P.K. Agarwalla Vs CCE & ST, Kolkata (cited supra), the Kolkata Bench of this Tribunal has held as under:15 Appeal No. ST/27071/2013
"8. As in this case, Show Cause Notice proposes to demand of Service Tax under the "Mining Service" which the Adjudicating Authority has held that the demand is not sustainable under Section 65(105)(zzzy) of the Finance Act, 1994 which means that the activity undertaken by the appellant does not fall under "Mining Service". But the Adjudicating Authority has gone beyond the scope of the Show Cause Notice by holding that the activity undertaken by the Appellants falls under Section 65(105)(zr) of the FA, 1994 which is beyond the scope of the Show Cause Notice. 9. In that circumstances, we hold that demand proposed in the Show Cause Notice under "Mining Service" and confirmed under "Cargo Handling Service". Therefore, the impugned order is not sustainable in the eyes of law which is beyond the scope of Show Cause Notice. Accordingly, impugned order is set aside."
36. It is also important that the work of appellant is that for land development, excavation and filling for agricultural land at Anantapur District as awarded to them by GKC Projects Ltd. The scope of work encompasses the removal of overburden on the land and improvement of the land for agricultural purpose. Service regarding for 'Site Formation and Clearance, excavation and earth moving and demolition' service as defined under Section 65(97a) of the Finance Act, 1994 as follows:
(97a) "site formation and clearance, excavation and earthmoving and demolition" includes,
(i) Drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or
(ii) Soil stabilization; or
(iii) Horizontal drilling for the passage of cables or drain pipes;
or
(iv) Land reclamation work; or
(v) Contaminated top soil stripping work; or
(vi) Demolition and wrecking of building, structure or road,
but does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies;16 Appeal No. ST/27071/2013
37. As per the above definition, services, in relation to agriculture purposes clearly excluded from levy of Service Tax. Therefore, the activities undertaken by the appellant for the agriculture purposes is excluded from levy of the Service Tax also.
38. As per above discussion, the demands is not sustainable in law. Since, the demand is not sustainable on merit, the imposition of penalty will also not sustain. In view of these facts, there is no need to consider the matter on any other grounds.
39. Therefore, in view of the same the impugned order is liable to be set aside.
40. Appeal allowed.
(Pronounced in the open court on_09.01.2026_) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Shirisha