CESTAT, Mumbai Bench
Sanjeev K. Gaddamwar vs. Commissioner of Central Excise, Nagpur
Section 65(25b)
Ramesh Nair, Judicial Member And Raju, Technical Member
Final Order No. A/88784/2017-WZB/STB
Appeal No. ST/88067/2013-MUM.
July  31, 2017Â
Circulars and Notifications: Notification No. 25/2012-ST, dated 20-6-2012,Notification No. 13/2003 – ST, dated 20-6-2003,Notification No. 14/2004 – ST, dated 10-9-2004,Notification No. 12/2012-ST, dated 17-3-2012,Circular No. 157/8/2012-ST, dated 27-4-2012,Circular No. 80/10/2004-ST, dated 17-9-2004.
ORDER
Raju, Technical Member – This appeal has been filed by Shri Sanjeev K. Gaddamwar against confirmation of demand of service tax and imposition of penalty under Sections 76, 77 & 78 of the Finance Act, 1994.
2. Learned Counsel for the appellant argued that the appellant is involved in the activity of construction work of “Traders Shop Mini Whole Sale (Bhajipala)” of Krishi Utpanna Bazar Samiti, Godown and Misc. Repairs of Buildings which were alleged to be in the nature of ‘Commercial or Industrial Construction’. Ld. Counsel argued that most of work has been done for PWD i.e. Public works department and are either exempted service or non-commercial in nature. Ld. Counsel argued that Maharashtra State Agricultural Marketing Board (MSAMB), Pune was established under Section 39A of Maharashtra Agricultural Produce Marketing (Development & Regulation) Act, 1963. Ld. Counsel argued that the Government of Maharashtra, in order to facilitate farmers to sell their produce and that reasonable price, constituted APMC in many towns. APMC have been created facility of shops and godowns for marketing and auctioning of agriculture produce of farmers. He argued that the objection of the market is to facilitate the sell of produce by farmers the benefits are availed by farmers.
2.1 The appellant received work orders for construction of “Traders Shop (Bhajipala) and Godowns” from Krishi Utpanna Bazar Samiti, Chandrapur. The appellant also carried out construction of ‘Traders Shop and Godowns’ of APMC at various places. Ld. Counsel argued that the constructions are used, or to be used, primarily for commerce or industry as regard under poor farmers to sell their produce. He argued that APMC has only charged to its member traders maintenance charge i.e. housekeeping charges that to at minimal rate of Rs. 1400/- per annum. He argued that the ownership of the shops and godowns are always remains with the APMC. Ld. Counsel relied on the C.B.E. & C. Circular No. 157/8/2012-S.T., dated 27-4-2012 to assert that the activity conducted by APMC is not commercial in nature. He further relied on the Circular No. 80/10/2004-S.T., dated 17-9-2004.
2.2 Ld. Counsel also argued that they are entitled to benefit of Notification No. 25/2012-S.T., dated 20-6-2012, 13/2003-S.T., dated 20-6-2003, 14/2004-S.T., dated 10-9-2004 and Notification No.l2/2012-S.T., dated 17-3-2012. The appellant further sought benefit of small scale exemption and argued that the said point was raised before the Commissioner (Appeals) but was not considered. Ld. Counsel also sought benefit of cum tax value. Ld. Counsel further argued that extended period cannot be raised as to tenders for such construction are published in local news papers and are allotted after bidding. He further argued that there is question of interpretation and therefore there cannot be any mala fide. He argued that in these circumstances penalties and interest cannot be levied.
3. Ld. AR relies on the impugned order.
4. We have gone through the rival submissions. It is seen that the market is constructed by APMC for the benefit of agriculturist. In this regard C.B.E. & C Circular No. 157/8/2012-S.T., dated 27-4-2012 in the said Circular the following has been observed.
“4. When examined with reference to its constitution and functions, the services provided by APMC out of the ‘market fee’ collected from the licensees, do not appropriately fall under the category of BSS. The distinction between BSS and BAS is explained in the instructions dated 28-2-2006 issued from F. No. 334/4/2006-TRU. In the light of the above instruction, the service provided by APMC out of the market fee is not in the nature of ‘outsourced service’. It is not possible to hold that the licensees have outsourced the development and maintenance of agricultural market to the APMC, which could have been otherwise undertaken by them, solely in their business interest. Development and maintenance of agricultural market infrastructure under taken by APMC in accordance with the statute, is for the benefit of all users, rather than an activity solely in the interest of licensees. Hence, APMC cannot be said to be rendering ‘business support service’ to the licensees. ‘Market fee’ is not in the nature of consideration for such BSS.
5. As statutory bodies, APMCs provide basic facilities in the market area out of the ‘market fee’ collected from the licensees, mainly to facilitate the farmers, purchasers and others. APMCs provide a host of services to the licensees in relation to the procurement of agricultural produce, which are ‘inputs’ in terms of the definition given in section 65(19) of the Finance Act, 1994 itself. To that extent the meaning of ‘input’ is much wider in scope than the meaning assigned in rule 2(k) of Cenvat Credit Rules, 2004. Therefore, it is clarified that the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-S.T.”
It is seen that the appellants have pointed out that only farmers charges are collected for the maintenance of the property and the said property is not registered out or sold to anybody. In view of above, it is apparent that the use of the said property is of non-commercial nature for the facilitation of the farmers. In this regard, ld. Counsel has also pointed out that Circular No. 80/10/2004-S.T., dated 17-9-2004 which is reproduced below:
“Construction services (commercial and industrial buildings or civil structures)
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 educational, 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 purposes like local government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to service tax.”
When the property in question is not used by owner for commercial purpose, then it cannot be liable for payment of service tax under commercial and industrial construction service as is apparent from Circular dated 27-4-2012. It is apparent that C.B.E. & C. circulars considered the use of the said property as non commercial in nature. In these circumstances, service tax under the head of Commercial and Industrial Construction cannot be levied on such properties. In view of above, the demand of Service Tax cannot be sustained and is set aside. Consequently the appeal is allowed.
