Brief Facts of the Case

Brief facts of the case :-

M/s Apollo Construction Projects Pvt. Ltd., D-502, Status-I, Opp. T. V. Tower, Thaltej, Ahmedabad - 380054 (hereinafter referred to as "the said Service Provider") is engaged in work of construction on contracts which appeared to fall under service category of "Commercial or Industrial Construction Service" under the Finance Act, 1994.

2. During the course of Review of "Service Tax on Construction Services" by the CERA Audit party, in order to identify unregistered service providers, the said Audit party verified records available in Registrar of Companies, from which the CERA audit found that the said service provider did not get themselves registered with Service Tax department. They also found that the contract amount received by the said service provider for the F. Y. 2005-06 was Rs.7,24,60,209/- and for F.Y. 2006-07 was Rs.7,82,54,424/- which resulted in to non payment of Service tax by the service provider who had not yet obtained Service Tax Payer code Registration under Section 69 of Finance Act, 1994.

3. Vide a letter dated 20.03.2009 issued from file F. No. STC/AR- 15/CERA(Review)/274/08-09, the said service provider was informed to obtain Service Tax registration number. The said service provider vide letter dated 07.07.2009 replied that they were not providing construction service of residential or commercial complex; that they were engaged in road construction activity of Government Projects, and therefore were not liable to obtain registration. The said service provider submitted copies of certain work orders/work completion certificate/subcontract orders. A further letter F.No.STC/AR-1S/CERA(Review)/274/0809 dated 21.7.2009 was issued by the Superintendent of Service Tax, AR15/ Div-III, Ahmedabad to the said service provider requesting for submission of Balance Sheets for the period 2005-06, 2006-07 and 2007-08. The said service provider, vide letter dtd. 27.7.2009 submitted the copies of audited balance sheets for the above period. Further, vide letter dated 4.11.2009 issued from file F.No.STC/AR- 15/CERA(Review)/274/08-09, the service provider was requested to obtain Service Tax registration and to pay the applicable service tax dues. Further vide letter dated 20.8.2010 issued from F.No.STC/AR- 15/CERA(Review)/274/08-09, the said service provider was requested to furnish Balance-sheets for financial year 2008-09 and 2009-10. The said letter was not replied/complied with by the said service provider.

4. The Deputy Commissioner, Service Tax, Div-III, Ahmedabad vide letter dated 8.7.2009 issued from F.No.STC/CERA/Review/Div-III/09-10 reported that “The office premises of the said company was visited by the Range Officer and found that the said company was engaged in road construction business and they were taking contracts for Municipal Corporation and Government. The said company vide their letter dated 7th July, 2009 had stated that during 2005-06 and 2006-07, they had executed two contracts with ONGC for a money value of Rs.5.88 Crores and Rs.7.35 Crores respectively. However, action would be taken on receipt of Balance Sheet and details as called for from the service provider”.

5. On scrutiny of Balance sheet for Financial Year 2007-08, it was noticed that the said service provider had earned income from operation (sub- contract receipts) amounting to Rs.4,48,69,085/-. 2

6. The service tax payable on the above amount was calculated as under :- Year Contract Available Taxabl amount Rate of Service Tax Amount abatement (33%e of gross S.T.(with payable (incl. received Rs. amt. amt) Rs. E.C) % cess) Rs. (67%) Rs. 2005-06 72460209 48548340 23911869 10.20 2439011 2006-07 78254424 52430464 25823960 12.24 3160853 2007-08 44869085 30062287 14806798 12.36 1830120 Total 195583718 64542627 7429984

From the above table it appeared that the said service provider had not declared the value of taxable service amounting to Rs.19,55,83,718/- to the Department by way of non-registering themselves, and had deliberately not paid service tax amount of Rs.74,29,984/- as calculated above.

7. "Commercial or Industrial Construction Service" was brought in to the net of Service Tax with effect from 16.06.2005 and has been defined in Clause (25b) of Section 65 of the Finance Act, 1994. As per Section 65(25b) of the Finance Act, 1994;

“Commercial or Industrial Construction Service 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 or finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, 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 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 iii) 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, airport, railways, transport terminals, bridges, tunnels, and dams”.

Further, as per sub-clause (zzq) of Clause (105) of Section 65 of the Finance Act, 1994 the taxable service means any service provided or to be provided to any person, by a commercial concern, in relation to commercial or industrial construction service. Further it is interalia provided under Section 67(1)(i) of the Finance Act, 1994 that where service tax is chargeable on any taxable service with reference to its value, then such value shall be the gross amount charged by the service provider for such service provided or to be provided by him.

As per Provision of Section 68 of Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994 as amended, every person providing taxable service to any person liable to pay service tax at the rate prescribed in Section 66 to Central Government by the 5th of the month / quarter immediately following the calendar month / quarter in which the payments are received towards the value of taxable services (except for the month of March which is required to be paid on 31st March). 3

According to Section 69 of the Finance Act, 1994, (1) Every person liable to pay the service tax under this chapter or the rules made there under shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the Superintendent of Central Excise. (2) The Central Government may, by notification in the Official Gazette, specify such other person or class of persons, who shall make an application for registration within such time and in such manner and in such form as may be prescribed.

8. According to Section 70 of the Finance Act, 1994 every person liable to pay service tax is required to himself assess the tax due on the services provided by him and thereafter furnish a return to the jurisdictional Superintendent of Service tax by disclosing wholly & truly all materials facts in ST-3 returns.

9. The said assessee did not get registered with the department and had not disclosed full, true and correct information about the value of the taxable service provided by them. Thus, it appeared that there was a deliberate withholding of essential and material information from the department about service provided and value realized by them. It appeared that all these material information had been concealed from the department deliberately, consciously and purposefully to evade payment of service tax. Therefore, in this case all essential ingredients existed to invoke the extended period in terms of proviso to Section 73 (1) of Finance Act 1994 to demand the Service tax short paid.

10. As per Section 75 ibid every person liable to pay the tax in accordance with the provisions of Section 68, or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed is liable to pay simple interest (as such rate not below ten per cent and not exceeding thirty six per cent per annum, as is for the time being fixed by the Central Government, by Notification in the Official Gazette) for the period by which such crediting of the tax or any part thereof is delayed.

11. It appeared that the said service provider had not obtained service tax registration, not declared the correct value received by them for rendering taxable services to the department and also not discharged their service tax liability on the said amount for the financial year 2005-06 as observed by CERA- Audit, and thus they had contravened the provisions of section 67 of the Finance Act 1994 in as much as that they failed to determine the correct value of taxable service provided by them, Section 68 of the Finance Act 1994 read with rule 6 of The Service Tax Rules 1994, in as much as that they failed to determine and pay the correct amount of service tax and Section 69 of the Finance Act 1994 read with rule 4 of The Service Tax Rules 1994, in as much as that they failed to get themselves registered with the Service Tax department.

12. From the evidence, it appeared that the said service provider had not taken into account the incomes received by them for rendering taxable services for the purpose of payment of service tax and thereby escaped their tax liabilities. The deliberate efforts to not declare the value of taxable service to the department by not getting service tax registration, not submitting ST-3 returns and not paying the service tax was in utter disregard to the requirements of law and breach of trust deposed on them. Such outright act in defiance of law appeared to have rendered themselves liable for stringent penal 4 action as per the provisions of Section 76, 77 and 78 of Finance Act 1994 for suppression or concealment or furnishing inaccurate value of taxable service with intent to evade payment of service tax.

13. Therefore, a Show Cause Notice bearing F.No.STC/4- 84/O&A/10-11 dated 18.10.2010 was issued to M/s Apollo Construction Projects Pvt. Ltd., D502, Status-I, Opp. T. V. Tower, Thaltej, Ahmedabad - 380054 to show cause to the Commissioner, Service Tax, Ahmedabad as to why:- i) the total value of Rs.19,55,83,718/- shown as the contract amount received for the Financial Year 2005-06 to 2007-08 should not be considered as taxable value towards rendering of taxable services as Commercial or Industrial Construction Services and service tax thereupon as calculated at appropriate rate prevailing during the relevant time as discussed in the foregoing paras which comes to Rs.74,29,984/- should not be demanded from them under the proviso to Section 73 (1) of the Finance Act, 1994, invoking the larger period of five years as discussed hereinabove. ii) Interest at applicable rate on the amount of Service Tax liability of Rs.74,29,984/- as above should not be charged and recovered from them, under Section 75 of the Finance Act, 1994. iii) Penalty should not be imposed upon them under Section 76 of the Finance Act 1994, for the failure to the make the payment of Service Tax in prescribed time limit. iv) Penalty should not be imposed upon them under Section 77 of the Finance Act 1994, for the failure to take registration of Service Tax within prescribed time limit and thereby failing to file prescribed Service Tax returns (ST-3). v) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for suppressing the value of taxable services provided by them before the department with intent to evade payment of Service Tax.

Defence Reply & Personal Hearing:

14. In reply to the show cause notice, the said service provider filed a written submission dated 10.3.2011. In the said written submission they submitted that in reply to letter No: STC/AR-15/CERA (Review)/274/08-09/ 1552 dated 20.03.2009, for obtaining the Service Tax Registration under section 69 of the Finance Act, 1994 they had vide letter No: NIL date: 07.07.2009 submitted that they are not engaged in providing the service of Construction of Residential complex or Commercial Complex but doing the Construction of Road as per the work order awarded by the Government and as such construction activity did not fall within the purview of service tax and therefore no service tax registration had been obtained under the provisions of section 69 of the Finance Act, 1994.

14.1 They submitted that as directed by the Range Officer vide letter No. STC/ AR-15/ CERA (Review)/ 274/08-09 dated 21.07.2009, they had submitted the Audited Balance Sheet with profit and loss A/c for the year 2005-06, 2006-07 and 2007-08 vide letter dated 27.07.2009.

14.2 They further submitted that in the para 4 of the show cause notice it is stated that the Deputy Commissioner, Service Tax, Div. III, Ahmedabad vide letter No. STCICERA/ Review/ Div-IIII 09-10 has reported that the office premises of the said company was visited by the Range Officer and found that the said company was engaged in ROAD CONSTRUCTION BUSINESS and they 5 are taking contract for municipal corporation and Government. From the above report of Deputy Commissioner it reveals that they were not engaged in the Business of Construction of Commercial and Residential Complexes but in the road construction, which is not covered under the purview of the provisions of Finance Act, 1994 relating to the Service Tax and therefore the demand of Service Tax under Section 73 of the Finance Act, 1994 is not maintainable and sustainable. They relied on the following decisions of the Hon'ble Tribunal (1). Scott Wilson Kirpatrick (I) Pvt. Ltd. Vis. Commissioner of S.T. Bangalore 2006(3) S.T.R.183 (Tri-Bang) (2). Lakheni Builders V Is. Commissioner of Service Tax, Ahmedabad 2010(17) S.T.R.588 (Tri-Ahmd) (3). Commissioner of Service Tax, Ahmedabad Vis. Shilpa Constructions Pvt Ltd. 201 (19) S.T.R. 830 (Tri- Ahmd) (4). Scott Wilson Kirkpatrick (I) Pvt. Ltd. Vis. Commissioner of S.T. Bangalore 2007 (5) S.T.R. (Tri.- Bang)

14.3 Further, they drew attention to the Board's Circular No. 11 0/4/2009-S.T.,dated 23-2-2009 and No.B 1/16/2005- TRU, dated 27-7-2005 wherein it s clarified that "Commercial or Industrial Construction service [section 65(105) (zzq)] specifically excludes construction or repairs of roads. However, management, maintenance or repair provided under a contract or an agreement in relation to the properties, whether immovable or not, is leviable to service tax under section 65(105)(zzg) of the Finance Act, 1994. There is no specific exemption under this service for maintenance or repair of roads etc. Reading the definitions of these two taxable services in tandem leads to the conclusion that while construction of road is not a taxable service, management, maintenance or repair of roads are in the nature of taxable services, attracting Service Tax"

And at para 14.4 of the Circular No. B/1/6/2005-TRU, dated 27-7-2005 it is clarified that "At present, services rendered for construction of commercial or industrial buildings is taxable. However, construction of roads is not liable to service tax. A point has been raised that if a commercial complex is constructed which also contains roads whether the value of construction of roads would be liable to service tax. "

They submitted that as clarified by the Board in the aforesaid circulars, the present demand of Service Tax appeared unwarranted and deserved to be vacated.

14.4 They further submitted that in para 5 and 6 of the show cause notice, the facts of income earned from providing service of Road Construction is mentioned in the Balance Sheet of the year 2005-06, 2006-07 and 2007-08 of the noticee is discussed and the liability of service tax on this income is calculated. However, considering the above given reply, there is no liability of service tax on them.

14.5 They requested for personal hearing in the matter.

15. A personal hearing was fixed for 28.2.2012. Shri R.R.Dave, consultant appeared for personal hearing on behalf of the said service provider. He submitted that a short adjournment is required by him for collecting documents as the case was too old, he could not do so. Therefore, next date of personal hearing was fixed for 12.3.2012. Shri R.R.Dave, consultant appeared for personal hearing on behalf of the said service provider. He submitted a written submission dated 12.3.2012. He was not able to give contract wise /year wise figures for all the years for which demand has been raised. He also could not produce all the contracts which 6 pertain to the demand in question. On his request next date of hearing was fixed for 16.3.2012.

16.1 In the said written submission it was submitted that the original contracts were allotted to M/s G.A.E.L, who had then sublet this contract to them and as all these activities were not covered under Service Tax, they had not obtained Registration under Section 69 of the Finance Act, 1994 and not paid Service tax. 7

16.2 They further submitted/discussed each contract and the activities carried out and it's Service Tax Applicability. a) Contract No.:- 1 to 4 Dated 21.11.2005 They had carried out the construction of the road from Ankleshwar to Umarwada under this contract. The construction is completed and ONGC has issued Completion Certificate. As per Boards Circular No. Bl/6/2005-TRU Dated 27.07.2005 the service of construction of road was not covered under the Service Tax Net and therefore no Service Tax was leviable on the value received. In further clarification in respect of levy of Service· Tax on repair/renovation/widening of roads, it was clarified at para 3 of Circular No. 110/4/2009/S.T. Dated 23.02.209 stated/classify the activity in two category. 1. Maintenance or Repair Activity 2. Construction Activity. As per this circular the activity carried out by them was covered under para 3 (B)(III) of the said Circular and therefore service tax was not leviable. 8 b) Contract No.5 In this contract Dated 18.05.2005, they had carried out the work of supply, erection, testing commissioning, operation and maintenance of magnetically couple water meter at 1550 sites in Gujarat has been carried out on turnkey basis and they were of the view that such services being turnkey project were not covered under Service Tax Net as it was held by apex that primary objective of the contract would determine the issue so the Tribunal decided that the work contract in turnkey basis was not consultancy contract and the consultancy portion could not be vivisected for charging Service Tax and therefore when a turnkey project in one contract for the supplying of material and installation of the project on the turnkey basis no Service Tax was chargeable.

They relied on the decision of Hon'ble Tribunal Larger Bench in case of Commissioner V/s. Ishikawajima - Harima Heavy Ind. Co. Ltd. reported in 2009(13) STR 650 (Tri.-Ahd.) wherein it was held that turnkey project cannot be vivisected and part of each subject to Service Tax c) Contract No.6 Under this contract they had carried out the activity providing and lying of various GRP pipeline from MPH to ONGC colony. In this regards they relied on the decision of Hon'ble Tribunal in case of Nagarjuna Construction Co. Ltd. V/s.Commissioner of Central Excise, Hyderabad reported in 2010 (19) STR 259 (Tri. Bang.) d) Contract No.7 Under this contract dated 15.12.2003 they had carried out the service of providing lowering, lying and joining of pipeline for water supply, distribution network including rising mens for water supplying distribution service. In this regard they relied on decision of Hon'ble Tribunal in case of Indian Hume Pipe Co. Ltd. V/s. Commissioner of Central Excise, Trichy reported in 2008 (12 ) STR 363 (Tri- Chennai).

16.3 They submitted that the activity / services provided by them during the period from 2005-06 to 2007-08 for which SCN was issued was not sustainable in law on the ground discussed in forgoing paras and deserve to be vacated in the interest of justice.

17. The said service provider vide their letter dated 16.3.2012 requested for another date instead of 16.3.2012 because of announcement of Budget 2012- 13. The said service provider vide letter dated 18.3.2012 submitted statement showing the details of contract executed and receipt of payment during the period from 2005-06 to 2007-08. They further cited para 21 of part-C-4 under the heading ‘Retrospective changes’ of D.O. Letter F.No. 334/1/2012 dated 16.3.2012 which read as “Repair of roads has been exempted from service tax by Notification 24/2009-ST dated 27.7.2009. By Section 97, exemption relating to roads is extended for the period commencing from June 16, 2005”. They requested to keep the decision in abeyance till the Finance Bill 2012 receives the presidential assent. Accordingly, the case was kept in abeyance.

18. The said service provider vide their letter dated 7.6.2012 submitted their final submission and requested to finalize the case as they were not desirous of further personal hearing. They submitted statement duly certified by the statutory auditors, Virendra Chinubhai & Co., Chartered Accountants, showing bifurcation of the amount shown in table at para 6 of the show cause notice along with copy of ledgers. 9

18.1 It was further submitted that amounts of Rs. 3,82,913/- and Rs. 14,55,778/- is the retention money received in respect of Projects ‘Ranuj/Matarwadi (Patan school project) and Bhachau School. The said income was against the value of service of reconstruction of school project of GIDC after earthquake under Prime Minister Relief fund of Earthquake Rehabilitation program under work-order dated 27.1.2002 and 22.1.2003 which was completed on 31.8.2003 and 22.1.2003 respectively. Copy of work completion certificate was enclosed. It was submitted that during the said period construction services were not taxable and therefore there is no liability of service tax.

18.2 It was further submitted that Rs. 26,923/- and Rs. 16,78,000/- during the year 2006-07 is the income of machinery rent recovered from sub- contractor. Copy of ledger account was also submitted in this regard. It was submitted that this income is not on account of any services provided by them but were the expenditure entries between the registered office and the site office. It was further submitted that the said income is not rent income of tangible goods and no service tax was payable on the same. They also submitted that the machinery was a movable property and the said income cannot be taxed under the Finance Act, 1994.

18.3 It was finally submitted that the Hon’ble President of India has given the assent to the Finance Bill-2012 on 28.5.2012 without any amendment or change on the issue of applicability of service tax on the construction of road service with retrospective effect.

Discussion and Findings: 19. I have carefully gone through the records of the case, written submissions made by the said service provider in their defence replies to the show cause notice as well as the submissions made during the course of personal hearings and the records/documents produced by them. I find that the issues to be decided in this case are: i) whether, the services provided by the said service provider to M/s ONGC Ltd under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. are the services provided in respect of roads which is excluded from the definition of “Commercial or Industrial Construction Service” given under Section 65(25b) of the Finance Act, 1994. ii) whether, the services provided by the said service provider to M/s Ahmedabad Municipal Corporation under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. in respect of laying of bituminous mixes to paver various sites are the services covered under “Commercial or Industrial Construction Service” given under Section 65(25b) of the Finance Act, 1994 taxable under Section 65 (105)(zzq) of the Finance Act, 1994. iii) whether, the services provided by the said service provider to M/s ONGC Ltd under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. for laying of GRP pipeline from MPH to ONGC colony & office at Ankleshwar are the services covered under “Commercial or Industrial Construction Service” given under Section 65(25b) of the Finance Act, 1994 taxable under Section 65 (105)(zzq) of the Finance Act, 1994. iv) whether, the services provided by the said service provider to AUDA under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. for providing, lowering, laying and joining of pipelines for water supply distribution network including rising mains for water supply distribution system for Bodakdev in western AUDA area are the services covered under “Commercial or Industrial Construction Service” 10

given under Section 65(25b) of the Finance Act, 1994 taxable under Section 65 (105)(zzq) of the Finance Act, 1994. v) whether, the services provided by the said service provider to Gujarat Water Supply & Sewerage Board under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. for supply, erection, testing, commissioning, operation & maintenance of magnetically coupled water meter at various sites are the services covered under “Commercial or Industrial Construction Service” given under Section 65(25b) of the Finance Act, 1994 taxable under Section 65 (105)(zzq) of the Finance Act, 1994. vi) whether amount of Rs. 3,82,913/- received from Ranuj/ Matarwadi (Patan school project) and the amount of Rs. 14,55,778/- received from Bhachau School Project during the year 2005-06 is liable to be taxed under the category of “Commercial or Industrial Construction Service” as per Section 65(25b) of the Finance Act, 1994 read with Section 65 (105)(zzq) of the Finance Act, 1994. vii) whether amount of Rs. 17,04,923/- during the year 2006-07 received as ‘Machine Rent’ is liable to be taxed under the category of “Commercial or Industrial Construction Service” as per Section 65(25b) of the Finance Act, 1994 read with Section 65 (105)(zzq) of the Finance Act, 1994.

20. As regards the taxability of the services provided to M/s ONGC Ltd and M/s Ahmedabad Municipal Corporation as mentioned at Para 19(i) and 19(ii) above, I find that construction services in respect of roads have been specifically excluded from the taxable services of commercial or industrial construction service defined under section 65(25b) of the Finance Act, 1994. Therefore, there cannot be any question of taxing construction services provided in respect of roads. On seeing the work-orders, I find that in the case before me the services provided by the said service provider to M/s ONGC Ltd and M/s Ahmedabad Municipal Corporation are the services provided in respect of roads and hence cannot be subjected to service tax under Section 65 (105)(zzq) of the Finance Act, 1994. I further observe that Government by Notification No. 24/2009-Service Tax, dated 27th July, 2009 exempted the taxable service, referred to in sub-clause (zzg) of clause (105) of section 65 of the Finance Act,1994, provided to any person by any other person in relation to management, maintenance or repair of roads, from the whole of the service tax leviable thereon under section 66 of the said Finance Act. In view of this service tax appeared to be chargeable on management, maintenance or repair of roads services from 16.06.2005 to 27.07.09 and various show cause notices were issued. However, in the Finance Bill, 2012 retrospective changes had been proposed by insertion of new sections 97 and 98 and exemption relating to roads was extended for the earlier period commencing from 16.6.2005. The said retrospective changes have come in to effect as the Finance Bill, 2012 has received Presidential assent on 28.5.2012. Finance Act, 2012 now reads as under:

“FINANCE ACT, 2012 [Act No. 23 of 2012]

Act to give effect to the financial proposals of the Central Government for the financial year 2012-2013.

Insertion of new sections 97 and 98. Special provision for exemption in certain cases relating to management, etc., of roads.

"97. (1) Notwithstanding anything contained in section 66, no service tax shall be levied or collected in respect of management, maintenance or repair of roads, during the period on and from the 16th day of June, 2005 to the 26th day of July, 2009 (both days inclusive). 11

(2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all material times.

(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President.

Special provision for exemption in certain cases relating to management, etc., of noncommercial Government buildings.

98. (1) Notwithstanding anything contained in section 66, no service tax shall be levied or collected in respect of management, maintenance or repair of non-commercial Government buildings, during the period on and from the 16th day of June, 2005 till the date on which section 66B comes into force.

(2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all material times.

In view of this, the dispute with respect to taxability of services provided in respect of management, maintenance or repair of roads is also now laid to rest. Therefore, I arrive at a conclusion that demand on services provided in respect of roads under the category of “Commercial or Industrial Construction Service” is not sustainable. I find that the said demand was raised on the basis of review of “Service tax on construction service” conducted by CERA audit party for identifying unregistered service providers. The said audit party had verified the records available in the Registrar of Companies and accordingly, demand was raised on the basis of the Balance sheet figures as detailed in table at para 6 of the show cause notice. I find that the said service provider has provided bifurcation of the amount shown in table at para 6 of the show cause notice duly certified by the statutory auditors, Virendra Chinubhai & Co., Chartered Accountants, along with copy of ledgers. I therefore, accept the said bifurcation which is detailed along with the calculation of service tax as under: Year: 2005-06 Description of the Amount Taxable Rate of Service tax Contract received (Rs) amount (33% service of the gross tax with amount) edu.cess (%) ONGC Ankleshwar 2,69,60,104/- (Road project) AMC (Road 1,91,74,521/- project) Total 4,61,34,625/- 1,52,24,426/- 10.2% 15,52,892/- GWSSB(water 2,44,86,893/- 80,80,675/- 10.2% 8,24,229/- meter) Ranuj 3,82,913/- 1,26,361/- 10.2% 12,889/- Matarwadi(Patan School project) Bhachau School 14,55,778/- 4,80,407/- 10.2% 49,001/- Project Total 2,63,25,584/- 86,87,443/- 8,86,119/- Grand Total 7,24,60,209/- 2,39,11,869/- 24,39,011/-

Year: 2006-07 Description of the Amount Taxable Rate of Service tax Contract received (Rs) amount (33% service of the gross tax with amount) edu.cess (%) ONGC Ankleshwar 4,83,03,816/- (Road project) AMC (Road 1,79,43,477/- project) Total 6,62,47,293/- 2,18,61,607/- 12.24% 26,75,861/- GWSSB(water 1,03,02,206/- 33,99,728/- 12.24% 4,16,127/- meter) Machine Rent 17,04,923/- 5,62,625/- 12.24% 68,865/- Grand Total 7,82,54,422/- 2,58,23,960/- 31,60,853/-

Year: 2007-08 Description of the Amount Taxable Rate of Service tax Contract received (Rs) amount (33% service of the gross tax with amount) edu.cess (%) AMC (Road 1,43,42,012/- 47,32,864/- 12.36% 5,84,982/- project) Total 1,43,42,012/- 47,32,864/- 12.36% 5,84,982/- ONGC (Pipeline) 1,60,37,558/- 52,92,394/- 12.36% 6,54,140/- AUDA (Pipeline) 11,49,490/- 3,79,332/- 12.36% 46,885/- GWSSB(water 1,33,40,025/- 44,02,208/- 12.36% 5,44,113/- meter) Total 3,05,27,073/- 1,00,73,934/- 12,45,138/- Grand Total 4,48,69,085/- 1,48,0 6,798/- 18,30,120/-

In view of the above, demand of Rs. 48,13,735/-( Rs. 15,52,892/- + Rs. 26,75,861/- + Rs. 5,84,982/-) under the category of “Commercial or industrial construction service” is not sustainable. Consequently, the proposals for interest and penalty on the above demand also donot survive.

20.1 Now, I come to the issue of taxability on the laying of GRP pipeline from MPH to ONGC colony & office at Ankleshwar as mentioned at Para 19(iii) above, under “Commercial or Industrial Construction Service”. I find that the scope of “construction service” was expanded w.e.f 16.6.2005 to cover the services of construction of pipeline or conduit and the service was renamed as "Commercial or Industrial Construction Service" and has been defined in Clause (25b) of Section 65 of the Finance Act, 1994 as under: “Commercial or Industrial Construction Service 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 or finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, 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 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 13

iii) 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, airport, railways, transport terminals, bridges, tunnels, and dams”.

20.1.1 I find that the said service provider has not disputed the fact that they have executed the work of laying of GRP pipelines for M/s ONGC Ltd under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. They have simply relied on the judgment of Hon'ble Tribunal in the case of Nagarjuna Construction Co. Ltd. V/s.Commissioner of Central Excise, Hyderabad reported at 2010 (19) STR 259 (Tri. Bang.). I find that the above decision has been relied on by the Hon’ble CESTAT, West Zonal Bench, Ahmedabad in the case of Larsen & Toubro Ltd reported at 2011 (22) STR 459 (Tri. Ahmd.). The Hon’ble CESTAT Ahmedabad has allowed the appeal following the ratio laid down by the Co- ordination Bench of the Tribunal in the case of M/s Nagarjuna Construction Co. Ltd. I find that by doing so, the Hon’ble CESTAT, WZB, Ahmedabad has failed to appreciate that in M/s Nagarjuna Construction Co. Ltd case, the Hon’ble Tribunal did not go into the detailed definition of commercial or industrial activity and just held that because the revenue earned was less than the cost incurred to maintain water supply by the Board and as the Board is run by substantial grants released by the State Government, the laying of pipe line for supply of water is not a commercial activity.

20.1.2 I find that the Bombay High Court in the case of M/s Ulhas Oil and Chemical Industries (P) Ltd – 1988 (36) ELT 462 (Bom.) has clearly held that while citing precedents a clear distinction has to be made between a point which is necessary for the determination of a case and a point which is not necessary for the determination of the case. If the point does not arise at all, the observations pertaining to such a point are casual observations which cannot have any effect as a precedent. Similarly, in SPIE CAPAG S.A. – 2009 (243) ELT 50 (Tri. Mum), the Tribunal has held that an opinion of the court on any issue, not necessary for deciding the dispute, cannot be considered as ratio of that case.

20.1.3 In M/s Nagarjuna Construction case, the Tribunal has tried to canvass the point that the sale of water to the local bodies is at a loss because water is sold at a rate less than the cost incurred to maintain water supply by the Board. Thus, it cannot be termed as a commercial activity. The Tribunal has tried to equate commercial activity with profit. The plain meaning of 'commerce' is the activity of buying and selling. The achievement of profit or the motive being profit-oriented is neither relevant, nor obliterates the nature of activity as a commercial activity, once the activity is that of buying and selling and deriving income from the activity. As per New Oxford dictionary, the word 'commerce' means the activity of buying and selling. As per Webster's ninth new Collegiate Dictionary, a commercial activity is 'exchange or buying and selling of commodities on a large scale involving transportation from place to place'.

20.1.4 In order to determine whether use of any construction is commercial or non commercial it is very decisive to examine the meaning of word “commercial”. In this regard I would also like to find the meaning of “commercial” as defined by the Government of India, (Ministry of Finance), Department of Revenue, Central Board of Excise and Customs, Tax Research Unit in their D.O.F. No. 334/1/2010-TRU, dated 26-2-2010 related to the Budget 2010- 11 — Changes and Clarifications on Service Tax. The said word was defined as under “Redefining the scope of Commercial Training and Coaching Service” giving retrospective effect w.e.f. July, 2003. The relevant portion of the said circular is reproduced as under. 14

6. Redefining the scope of Commercial Training and Coaching Service 6.1 Commercial training and coaching service was introduced in Budget 2003 with a view to tax the mushrooming coaching institutes and training centres which either provide coaching classes for examinations or unrecognized courses in various areas such as, management, marketing, engineering etc. The schools, institutes, colleges and universities providing courses that lead to award of recognized diplomas/degrees and sports education were kept out of tax net. These include universities created under a Central or State Act, institutes recognized by UGC as universities or deemed universities, institutes granted recognition professional councils like AICTE, Medical Council of India, Bar Council of India etc. To distinguish the former types of institutes/centres from the latter, the word ‘commercial’ was used in the definitions of ‘Commercial training and coaching’, ‘Commercial training and coaching centres’ and ‘taxable service’. 6.2 The use of the word ‘commercial’ in these definitions has led to certain unintended consequences. A view has been taken that the term ’commercial’ appearing in various definitions implies that the institute must be run with a profit motive to fall under the taxable service. A number of taxpayers resisted paying tax on this ground. In order to clarify the legislative intent, the definition of the taxable service is being suitable amended, through insertion of an Explanation, to clarify that the word ‘commercial’ means any training or coaching that is provided for a consideration irrespective of the presence or absence any profit motive. This amendment is being carried out retrospectively (from July 2003) so as resolve the disputes pending at different levels of the dispute settlement system.

20.1.5 Thus, I find that the meaning of word “commercial” stands clarified as above, as any training or coaching that is provided for a consideration irrespective of the presence or absence any profit motive. This amendment is being carried out retrospectively (from July,2003) so as to resolve the disputes pending at different levels of the dispute settlement system. Therefore, with regard to the applicability of the meaning assigned to the word “commercial” as mentioned in para 6.2 of the aforesaid D.O. letter, I find that the intention of the Government is very clear that the said meaning is not exclusively meant for the service of “Commercial training and coaching centres’ but can also be applied in the cases wherever the word “commercial” have been used in the statue i.e. Finance Act,1994.

20.1.6 Therefore, what transpires from the above is (i) “commercial” means any activity which is carried out for a consideration is considered to be a commercial activity and the presence or absence of any profit motive either of service provider or service recipient it is not at all relevant and (ii) information has to be gathered with regard to usage of the construction in question from the approved plan of the building or civil construction for deciding taxability of the services rendered by the service provider to the recipients of the services.

20.1.7 I find that the Final order no. A/190/WZB/AHD/2010 dated 30.09.2010/25.01.2011 in appeal no. ST/184/2007 filed by M/s L & T, Ahmedabad passed by Hon’ble CESTAT, WZB, Ahmedabad was not found legal and proper by the department and appeal was preferred against the same before the Hon’ble High Court of the Gujarat, Ahmedabad for deciding the Question of Law. In view of this, the ratio of the cited case can not be applied in the case before me.

20.1.8 I further observe that taxable service as per clause 105(zzq) of Section 65 of the Finance Act, 1994 read with Section 65(25b) of the 15

Finance Act, 1994 is a service provided or to be provided to any person, by any other person, in relation to commercial or industrial construction service. In view of the above definitions, it is evident that the “Construction of Pipeline or Conduit” is a taxable service subject to the following conditions:-

(i) such “Pipelines or Conduit” are used, or to be used, primarily for commerce or industry; (ii) the service provider shall be any other person.

20.1.9 I find that there is no dispute to the fact that the said service provider who constructed the pipelines is a separate entity than M/s ONGC and is thus definitely ‘any other person’ fulfilling the second condition. It has not been contested that the said pipelines were not used by M/s ONGC for commerce or industry. It is a well known fact that M/s ONGC is a commercial concern and therefore the pipelines constructed by the said service provider for M/s ONGC were to be used for Commercial or Industrial purpose and hence liable to service tax. I further observe that M/s ONGC is not responsible for discharging 'sovereign functions' of the State and have the status of 'industry'. Accordingly, the pipelines constructed by the said service provider for M/s ONGC are identifiable as those used or engaged in industry and hence, services provided in relation to such construction fall within the definition of 'Commercial or Industrial Construction Service'.

20.1.10 I further observe that the services provided by the said service provider also do not satisfy the criteria of CBEC Circular No. 80/10/2004- S.T. dated 17th September, 2004 which is reproduced as under:-

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 educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose 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.

I find that in view of the above circular, constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose of profit are not taxable, being non-commercial in nature which is not the case here.

20.1.11 In view of the above, the services of construction of pipelines provided by the said service provider fall under the taxable category of “Commercial or Industrial Construction Service” and are liable to service tax under sub-clause(zzq) of clause (105) of section 65 of the Finance Act, 1994. Therefore, the abated amount out of the gross amount received by the said service provider for providing the said service is the taxable value liable to service tax. 16

20.1.12 In view of the above discussions, I find that an abated amount of Rs. 52,92,394/- out of the total amount of Rs. 1,60,37,558/- received by the said service provider during the year 2007-08 is the taxable value under the category of “Commercial or Industrial Construction Service” and service tax of Rs. 6,54,140/- (inclusive of Edu.cess and Higher Edu. Cess) on the said taxable value is recoverable from them under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 ibid.

20.2 Now I come to the issue of taxability of the services provided by the said service provider to AUDA for providing, lowering, laying and joining of pipelines for water supply distribution network including rising mains for water supply distribution system for Bodakdev in western AUDA as mentioned at Para 19(iv) above, under “Commercial or Industrial Construction Service”. I find that the said service provider has again not disputed the fact that they have executed the work of for providing, lowering, laying and joining of pipelines for water supply distribution network including rising mains for water supply distribution system for Bodakdev in western AUDA area for Ahmedabad Urban Development Authority under a sub-contract given to them by M/s Gujarat Apollo Equipments Ltd. They have simply relied on the judgment of Hon'ble Tribunal in the case of Indian Hume Pipe Co. Ltd. V/s. Commissioner of Central Excise, Trichy reported in 2008 (12 ) STR 363 (Tri-Chennai). I find that the said decision is not applicable to the present case as the said case pertains to taxability of an activity under 'erection, commissioning & installation service' and not with the present entry 'commercial or industrial construction service'. The Indian Hume Pipe Co. decision has not been accepted by the Department and has been challenged before the Hon'ble High Court at Madras. The said assessee has thus wrongly equated the facts of the case of M/s Indian Hume Pipe & Co. Ltd. to the present case. In view of this, the ratio of the cited case of M/s Indian Hume Pipe & Co. Ltd can not be applied in the case before me.

20.2.1 I have already discussed in para 20.1, the taxability on the services of “Construction of Pipeline or Conduit” and what is meant by the word commerce. The only difference is that here the said services have been provided to AUDA and not M/s ONGC. Therefore, I donot find it necessary to repeat the same. It is a fact on record that the Pipelines got constructed by AUDA from the said service provider were used for transportation of water. The said factual position has not been denied or disputed by the said service provider.

20.2.2 The other issue that requires discussion is that whether the services provided by the said service provider to AUDA satisfy the criteria as given in CBEC Circular No. 80/10/2004-S.T. dated 17th September, 2004 which is reproduced as under to remain outside the purview of taxability under “Commercial or Industrial Construction Service”:-

such activity would be commercial and builders would be subjected to service tax.

20.2.3 I find that in view of the above circular, constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose of profit are not taxable, being non-commercial in nature. I observe that AUDA is an organization set up for sustained planned development of areas falling outside the periphery of Ahmedabad Municipal Corporation in addition to providing civic amentities. It is a well known fact that the civic service of providing water is not free to the residents of housing complexes and owners/users of commercial complexes but the said service is provided by charging fees. Therefore, AUDA by no stretch of imagination is engaged solely in any charitable or philanthropic activity. I have dealt the issue of what is meant by ‘commerce’ in above paras and as such, the construction carried out by the said assessee for AUDA is clearly identifiable as being used for the purposes of commerce or industry. I find that the said assessee has also failed to give any submission as to how the activity of AUDA cannot be treated as an activity of 'commerce' or in what manner or form, the said activity is distinguishable from a commercial activity. I find that the services provided by the said assessee do not satisfy the criteria as given in CBEC Circular No. 80/10/2004-S.T. dated 17th September, 2004 and therefore cannot escape taxability under the category of “Commercial or Industrial Construction Service”.

20.2.3 In view of the above, the services of providing, lowering, laying and joining of pipelines for water supply distribution network including rising mains for water supply distribution system provided by the said service provider and broadly covered under “Construction of Pipeline or Conduit” fall under the taxable category of “Commercial or Industrial Construction Service” and are liable to service tax under sub-clause(zzq) of clause (105) of section 65 of the Finance Act, 1994. Therefore, the abated amount out of the gross amount received by the said service provider for providing the said service is the taxable value liable to service tax.

20.2.4 In view of the above discussions, I find that an abated amount of Rs. 3,79,332/- out of the total amount of Rs. 11,49,490/- received by the said service provider during the year 2007-08 is the taxable value under the category of “Commercial or Industrial Construction Service” and service tax of Rs. 46,885/- (inclusive of Edu.cess and Higher Edu. Cess) on the said taxable value is recoverable from them under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 ibid.

21. Following the analogy of services provided to AUDA and ONGC for laying pipeline, I hold that since the erection of water meter is specifically meant for the purpose of measuring the quantity of water flowing through the pipeline and has no independent function, the services provided to GWSSB (Gujarat Water Supply & Sewerage Board) are the services provided in relation to laying of pipeline and are therefore taxable under the category of “Commercial or Industrial Construction Service”. Accordingly, abated amount of Rs. 1,58,82,611/- (Rs. 80,80,675/- for the year 2005-06, Rs. 33,99,728/- for the year 2006-07 & Rs. 44,02,208/-for the year 2007-08) out of the total amount of Rs. 4,81,29,124/- (Rs. 2,44,86,893/- for the year 2005-06, Rs. 1,03,02,206/- for the year 2006-07 & Rs. 1,33,40,025/-for the year 2007-08) received by the said service provider during the year 2007-08 is the taxable value under the category of “Commercial or Industrial Construction Service” and service tax of Rs. 17,84,469/-( (Rs. 8,24,229/- for the year 2005-06, Rs. 4,16,127/- for the year 18

2006-07 & Rs. 5,44,113/-for the year 2007-08) (inclusive of Edu.cess and Higher Edu. Cess) on the said taxable value is recoverable from them under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 ibid.

22. As regards the amount of Rs. 3,82,913/- received from Ranuj/ Matarwadi (Patan school project) and the amount of Rs. 14,55,778/- received from Bhachau School Project during the year 2005-06, I find that the said service provider has contended that the said amounts pertains to the period prior to 10.9.2004 when the construction services were not taxable and therefore the above amounts are not in relation to providing the “Commercial or Industrial Construction Service”. I have seen the copies of the completion certificates submitted by the said service provider and accordingly I find that the said amounts pertain to the period prior to 10.9.2004. Hence, there is no question of taxing the said amounts. In view of the above, demand of Rs. 61,890/- (Rs. 49,001/- + Rs. 12,889/-) (inclusive of Edu.cess and Higher Edu. Cess) for the year 2005-06 under the category of “Commercial or industrial construction service” is not sustainable. Consequently, the proposals for interest and penalty on the above demand also donot survive.

23. As regards the amount of Rs. 17,04,923/- during the year 2006-07 received as ‘Machine Rent’, it is the contention of the said service provider that it is internal transaction between their head office and site office which is evident from the ledger account. They also submitted that it is not a rent income of tangible goods. I find that services of “supply of tangible goods” services have been brought under the service tax net w.e.f 16.5.2008 whereas, the said amount is received in the year 2006-07, hence there is no question of taxing the said amount. In view of the above, demand of Rs. 68,865/- (inclusive of Edu.cess and Higher Edu. Cess) for the year 2006-07 under the category of “Commercial or industrial construction service” is not sustainable. Consequently, the proposals for interest and penalty on the above demand also donot survive.

24. I observe that so far as ‘suppression of facts’ is concerned, the phrase implies that withholding of information is suppression of facts. P. Ramanatha Aiyar’s Concise Law Dictionary [1997 Edition Reprint 2003 – page 822] defines the phrase lucidly and accurately as – Where there is an obligation to speak, a failure to speak will constitute the “suppression of fact” but where there is no obligation to speak, silence cannot be termed “suppression”. It is manifestly clear from this that intention to evade payment of duty is implied in the suppression of facts. Since the said service provider was liable to self assess the liability to pay service tax, they had an obligation to furnish the correct and complete information and the value of services whether taxable or otherwise.

24.1 It is needless to recapitulate that the present show cause notice has arisen because of the review of “service tax on construction services” by the CERA Audit party and subsequent action by the jurisdictional service tax authorities. Had they not done the same, the evasion of service tax would have remained unnoticed. Therefore, this is a case of improper assessment amounting to deliberate non- declaration and suppression of vital information with a willful intention to evade payment of service tax. Accordingly, the invoking of extended period under proviso to Section 73(1) of the Act in the case before me is fully justified.

24.2 I find that in the present system of self-assessment, documents like invoices and other transaction details are not supplied to the Department. Moreover, the said service provider neither obtained service tax registration nor furnished the required details of receipt of such payment to the Department. Since, they even did not consult the Department in case of any doubt, the intention will have to be believed as that of evasion. Once the details are not submitted to the Department, 19 mis-declaration or suppression is rightly invoked. I, therefore, conclude that the element of suppression with intent to evade payment of service tax is conspicuous by the peculiar facts and circumstances of the case as discussed above and, therefore, the extended period of limitation under Section 73(1) of the Finance Act, 1994 is rightly invokable for recovery of service tax demanded in the impugned show cause notice. In view of the above discussion and findings, the ratio of cases relied upon by the said service provider can not be applied in the case before me.

25. I now take up the issue of imposition of penalty under section 76, 77 and 78 of the Act.

26. In view of the above, I hold that the said service provider have suppressed the facts with intention to evade payment of service tax. Thus penalty under Section 78 is mandatorily imposable as has been held by the Apex court in the case of Dharmendra Textile Mills Ltd-2008 (231) ELT 3 (SC) and Rajasthan Spinning & Weaving Mills Ltd-2009 (238) ELT 3 (SC). Therefore, penalty is imposable on the said service provider under Section 78 of the Finance Act, 1994. In view of the above discussion the ratio of the judgments relied upon by the said service provider can not be applied in this case.

26.1 As regards the issue of imposition of penalty under Section 76 of the Finance Act, 1994, I observe that penalty under Section 76 and 78 of the Finance Act, 1994 are mutually exclusive and once penalty under Section 78 is imposed, no penalty under Section 76 can be imposed in terms of the proviso inserted in Section 78 w.e.f 10.5.2008 in this regard. Therefore, no penalty under Section 76 is imposable for the period from 10.5.2008 onwards. However, in the case before me, since the demand of service tax is for the period from 2005-06 to 31.3.2008, there is no applicability of the proviso inserted in Section 78 w.e.f 10.5.2008. As the said service provider has not paid service tax within the stipulated time period as prescribed under Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, I hold them liable to penalty under Section 76 of the Finance Act, 1994.

26.2 As regards imposition of penalty under section 77 of the Finance Act, 1994, I observe that as discussed above the said service provider was liable to pay service tax under the category of “Commercial or Industrial Construction Services” under Section 65 (105)(zzq) of the Finance Act, 1994 as provider of service, but they failed to obtain registration as required under section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994. The said service provider had provided “Commercial or Industrial Construction Services” prior to obtaining the service tax registration in the said category. They also failed to furnish return as prescribed under Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994. The said contraventions have made the said service provider liable to penalty under section 77 of the Finance Act, 1994.

26.3 As regards invoking Section 80 of the Finance Act, 1994 for waiver of penalty, I find that the said service provider has not produced any reasonable cause for the failure to pay service tax except suggesting that it was their bonafide belief that service tax was not payable by them. I have already discussed the issue of taxability under the category of “Commercial or Industrial Construction Services” under Section 65 (105)(zzq) of the Finance Act, 1994. Therefore, I consider it appropriate to hold the said service provider liable to penalty under Section 76, 77 and 78 of the Finance Act, 1994. In view of the above discussion and findings, the ratio of cases relied upon by the said service provider for non imposition of penalty can not be applied in the case before me. 20

27. In view of the foregoing discussion, I pass the following order:

O R D E R

(i) I order to consider amount of Rs. 2,15,54,337/- [Rs. 52,92,394/- (ONGC Pipeline project for the year 2007-08) + Rs. 3,79,332/-(AUDA Pipeline project for the year 2007-08) + Rs. 80,80,675/- (GWSSB water meter project for the year 2005-06, Rs. 33,99,728/- GWSSB water meter project for the year 2006-07 & Rs. 44,02,208/- GWSSB water meter project for the year 2007-08 (Rupees Two crore fifteen lakh fifty four thousand three hundred and thirty seven) as detailed in para 20.1, 20.2 & 21 of this order as the taxable value under the category of “Commercial or industrial construction service” as defined in Section 65(25b ) of the Finance Act, 1994 taxable under Section 65(105)(zzq) of the Finance Act, 1994 ;

(ii) I confirm the demand of service tax of Rs. 24,85,494/- (Rs. 8,24,229/- for the year 2005-06, Rs. 4,16,127/- for the year 2006-07 & Rs. 12,45,138/-for the year 2007-08) (Rupees Twenty four lakh eighty five thousand four hundred and ninety four only), (including Education Cess and Secondary and Higher Education Cess) on the above taxable value, under the category of “Commercial or industrial construction service” under Section 73(2) of the Finance Act, 1994 and order to recover the same from M/s Apollo Construction Projects Pvt. Ltd;

(iii) I order to recover interest on the above confirmed demand of Rs. 24,85,494/- (Rs. 8,24,229/- for the year 2005-06, Rs. 4,16,127/- for the year 2006-07 & Rs. 12,45,138/-for the year 2007-08) (Rupees Twenty four lakh eighty five thousand four hundred and ninety four only) at the prescribed rate from M/s Apollo Construction Projects Pvt. Ltd under Section 75 of the Finance Act, 1994;

(iv) I impose penalty of Rs.200/- (Rupees Two hundred only) per day for the period upto 17.4.2006 during which failure to pay the tax continued, upon the said service provider, M/s Apollo Construction Projects Pvt. Ltd under Section 76 of the Finance Act, 1994; I impose penalty of Rs.200/- (Rupees Two hundred only) per day for the period during which failure to pay the tax continued, or at the rate of 2% of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax upon M/s Apollo Construction Projects Pvt. Ltd under Section 76 of the Finance Act, 1994, for the period from 18.4.2006 to 31.3.2008; provided further that the amount of penalty payable in terms of this section shall not exceed the service tax of Rs. 24,85,494/- (Rs. 8,24,229/- for the year 2005-06, Rs. 4,16,127/- for the year 2006-07 & Rs. 12,45,138/-for the year 2007-08) (Rupees Twenty four lakh eighty five thousand four hundred and ninety four only) payable by M/s Apollo Construction Projects Pvt. Ltd;

(v) I impose penalty of Rs. 24,85,494/- (Rs. 8,24,229/- for the year 2005- 06, Rs. 4,16,127/- for the year 2006-07 & Rs. 12,45,138/-for the year 2007-08) (Rupees Twenty four lakh eighty five thousand four hundred and ninety four only) on M/s Apollo Construction Projects Pvt. Ltd under section 78 of the Finance Act, 1994. In the event of M/s Apollo Construction Projects Pvt. Ltd opting to pay the amount of service tax along with all other dues as confirmed and ordered to be recovered, 21

within thirty days from the date of communication of this order, the amount of penalty liable to be paid by them under Section 78 of the Finance Act, 1994 shall be 25% of the said amount. However, the benefit of reduced penalty shall be available only if the amount of penalty is also paid within the period of thirty days from the communication of this order, otherwise full penalty shall be paid as imposed in the above order;

(vi) I impose penalty of Rs. 1,000/- (Rupees One thousand only) under Section 77 of the Finance Act, 1994 on M/s Apollo Construction Projects Pvt. Ltd for failure to comply with the provisions of Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994 and Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994.

(vii) I drop the demand of service tax of Rs. 48,13,735/-( Rs. 15,52,892/- + Rs. 26,75,861/- + Rs. 5,84,982/-) (Rupees Forty eight lakh thirteen thousand seven hundred and thirty five only) under the category of “Commercial or industrial construction service” as detailed in para 20 of this order.

(viii) I drop the demand of service tax of Rs. 1,30,755/- (Rs. 61,890/- + Rs. 68,865/-) (Rupees One lakh thirty thousand seven hundred and fifty five only) under the category of “Commercial or industrial construction service” as detailed in para 22 & 23 of this order.

(A.K.Gupta) Commissioner

Service Tax, Ahmedabad.

F.No.STC/4-84/O&A/10-11 Date: 19/6/2012 By RPAD.

To, M/s. Appollo Construction Projects Pvt Ltd., D-502, Status-I, Opp. T.V.Tower, Thaltej, Ahmedabad -380 054

Copy to : 1. The Chief Commissioner, Central Excise, Ahmedabad Zone, Ahmedabad. 2. The Assistant Commissioner, Service Tax, Division-III, A’bad. 3. The Supdt. Range-XV, Division-III, Service Tax, Ahmedabad. 4. Guard file.