Custom, Excise & Service Tax Tribunal
M/S Radius Corporation Ltd vs Cce, Raipur on 10 May, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 30.04.2013
Date of decision:
Service Tax Appeal No. 552 of 2008
And CO/362/2008
[Arising out of Order-in-Original No. Commissioner/RPR/44 dated 14.05.2008 passed by the Commissioner (Appeals), Central Excise, Raipur]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Radius Corporation Ltd. Appellant
Vs.
CCE, Raipur Respondent
Appearance:
Shri Krishna Kant, Advocate - for the Appellant
Shri Promod Kumar, Jt, CDR - for the Respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
Final Order No. 56362/2013
Per Sahab Singh:
This is an appeal filed by M/s. Radius Corporation Limited (hereinafter referred to as Appellant) against order-in-original No. Commiossioner/RPR/44/2008 dtd.14.05.2008 passed by Commissioner of Central Excise, Raipur.
2. Appellant is registered with Central Excise Department as a 100% Export Oriented Unit (EOU) for the manufacture of cultured pearls. On examination of appellants Profit and Loss Account for the year ending on 31.03.2006, it was noticed that large amounts are shown as income from Construction Receipts. Investigations were started by the Department and work orders, Agreements and invoices/bills were scrutinized. On investigation, it was felt by the Central Excise Officers that appellant has provided the services of Commercial or Industrial Construction Service as defined under section 65(25b) of the Finance Act, 1994 and appellant is liable to pay service tax amounting to Rs.71,83,080/-, Education Cess Rs. 1,43,662. Accordingly a Show Cause Notice dtd. 04.12.2007 was issued to the appellant demanding service tax amounting to Rs. 73,26,742/- along with interest and also proposing penalty under section 76,77 & 78 or the Finance Act. This Show Cause Notice was adjudicated by the Commissioner vide impugned order confirming the service tax of Rs. 73,26,742/- along with interest and also imposing of equal amount of penalty under section 78 of the Act. Appellant is in appeal against the impugned order.
3. Ld. Advocate appearing to the appellant submits that appellant is engaged in activity of excavation of land (digging, extraction of core), preparing of earthen floor, soil stabilization, raising/widening of bunds for safety of Reservoir, plantation and increasing the height of Reservoir to keep the water supply unaffected. Agreements executed by them, did not require extensive civil construction and whatever civil construction was required, had been completed prior to 10.09.2004 i.e. before coming of Industrial or Commercial Construction Service under service tax net. He submits that their activities primarily are digging of land, extraction of core and soil stabilization and do not fall under category of Industrial or Commercial Construction Service. He further submits that their activities fall under Site Formation & Clearance, Excavation, Earth moving & Demolition Services as defined under section 65(97a). Since Reservoir is a water body, no service tax is leviable as water bodies are excluded from levy of service tax under section 65(97a). Ld., Advocate also submits that appellant is also entitled to benefit of abatement under Notification No. 15/2004 dated 10.09.2004. He also states that demand is also time barred.
4. Ld. Joint CDR, Sh. Promod Kumar appearing for Revenue, submits that appellant has executed three agreements and scope of these agreement required extensive Civil Construction as it involved levelling of ground, construction of culverts, construction of earthen bunds with clay paddles, stone pitching of reservoir bund on top with cement grouting, construction of pumping station, canal cum Jetty, with RCC floor etc. He submits that Reservoirs is constructed to supply water to industrial units for profit and therefore these activities fall under Industrial or Commercial Construction services. He further submits that activities of the appellant do not fall under category of Site Formation and Clearance, Excavation and Earthmoving and Demolition Service as some excavation is done as part of construction work and no civil construction is covered under Section 65(97a). He further argues that abatement under Notification 15/2004 is not admissible as land and electricity were provided free of cost to the appellant. Appellant did not disclose the value, did not take registration and did not file return, therefore invocation of extended period is justified.
5. After hearing both sides, we find that appellant has executed three agreements dated 11.05.2000 as amended 17.10.2000, 05,04,2005 and 21.11.2006 with M/s Radius Water Ltd. The scope of these arguments has been summarized in para 7.1 of the impugned order which is reproduced below:
7.1 The scope of all the above agreements required extensive civil construction work as it involved layout of work, leveling of ground, construction of culverts, construction of earthen bunds with clay paddles, stone pitching of Reservoir bund on top with cement grouting, all ground fencing, stone pitching of reservoir bund on outer and inner slopes, construction of pumping station, construction of canal cum motor boat jetty with RCC floor and pipe railing, construction of office, store and staff quarters, construction of main gate and other controls etc., raising heights of reservoir bunds with related work, protection of reservoir which included dressing of Rain cuts, laying clay puddles, stone pitching etc. and extension of secondary reservoir which involved construction of earthen bund with clay puddles, stone pitching with cement grouting etc. Issue to be decided by us is whether these activities are covered under definition of Industrial or Commercial Construction Service as defined under section 65(25b) or under Site Formation and Clearance, Excavation Earthmoving & Demolition Services as defined under Section (97a) of the Finance Act. For the sake of convenience these definitions are reproduced below:
Section 65(25b):- The Commercial or industrial construction service means
(a) Construction of new building or a civil structure or a part thereof;
(b)
(c) .
(d) ..
Which is
(i) Used or to be used, primarily for; or
(ii) occupied, or to be occupied, primarily with; or
(iii) engaged or to be engaged, primarily in, Commerce or industry, or work intended for commerce or industry, but does not include such services in respect of roads, airports, railways, transport terminals, bridge, tunnels and dams.
Section 65(97a) Site formation and clearance, excavation and earthmoving and demolition includes,-
(i) drilling, boring and core extraction services for construction, deophysical, deological or similar purpose; 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.
6. We find that Engineering, Procurement and Construction contracts were signed by the appellant for construction of Major Ground Balancing Reservoir, for raising the height of existing major ground reservoir and for protection work of existing major ground reservoir and extension of secondary reservoir. Activities undertaken in relation to these contracts neither fit in the definition of site formation and clearance, excavation and earthmoving and demolition service nor these relate to repairing/renovating water sources as water sources in present case is river. Some part of site formation, excavation and earthmoving done by the appellant was for preparing of further construction of reservoir and other civil works. We therefore are of the view that these activities undertaken by the appellant are out of purview of Site Formation, and Clearance Excavation and Earthmoving and Demolition Service as defined under Section 65(97a) of the Act. On the other hand activities mentioned in para 7.1 of the Order in Original are in nature of construction of civil structure which is further supported by the fact that entries in the balance sheet are under the Heading Construction Receipts. We also note that reservoir is constructed for the purpose of supply of water to Industrial units on Commercial terms. We therefore agree with finding of Commissioner in holding that activities of appellant are covered under category of Commercial or Industrial Construction service as defined under Section 65(25b) of the Finance Act.
7. It is the contention of a appellant that appellant is eligible for 67% abatement of gross amount in terms of Notification 15/2004 dated 10.09.2004 as amended by Notification 1/2006 dated 01.03.2006. Under this Notification service tax is payable on 33% of gross amount if gross amount includes value of goods and material supplied or provided or used by provider of construction service. There is no dispute that land and electricity was supplied free to the appellant. In such a case appellant is not eligible for the benefit of abatement under Notification 15/2004 as amended by 1/2006 dated 01.03.2006.
8. Appellant has also challenged the invocation of extended period in the present case. We find that appellant has not disclosed the value, did not take registration and also did not file any Returns to the department. In such a case extended period has rightly been invoked by the Commissioner and consequently the appellant is liable to penalty under Section 78 of the Act.
9. In view of the above, we uphold the order passed by the commissioner and reject the appeal. Cross objection also gets disposed of accordingly.
(Pronounced on) (Justice G. Raghuram) President (Sahab Singh) Member (Technical) Neha 1