S.S. Kang, Vice President
1. Heard both sides.
2. The applicant filed this application for waiver of pre-deposit of amount of Service Tax of Rs. 8,19,445/- and penalties. The applicant had already deposited an amount of Rs. 1,50,000/-.
3. The contention is that the demand was confirmed on the ground that the applicant is providing commercial construction services. The applicant constructed warehouse on the land owned by railways and the construction for railway does not comes under the commercial or industrial construction service as per the definition under the Finance Act. It is also submitted that the applicant entered into a works contract with Central Warehousing Corporation for constructing the warehouse on railway land and the works contract comes under the purview of Service Tax with effect from June, 2007. The period in dispute is prior to June 2007. The contention is that there is no finding on the issue that the contract in question is only a works contract.
4. The contention of the Revenue is that as per the contract entered between the railway and Central Warehousing Corporation, the land were leased out to the Central Warehousing Corporation and Central Warehousing Corporation is liable to pay rent for the leased land. It is the Central Warehousing Corporation who floated the tenders for construction of warehouse and applicant in response to the tenders floated in Central Warehousing Corporation constructed the warehouse on behalf of the Central Warehousing Corporation. Therefore, the applicant comes under the purview of commercial and industrial construction services. The contention is that the commercial or industrial construction service includes construction of a new building or a civil structure or a part thereof. As the applicant constructed a warehouse for Central Warehousing Corporation, therefore, is liable to pay Service Tax as provided commercial or industrial construction service.
5. In this case, the main contention of the applicant is that the applicant constructed a warehouse on behalf of the railway and the land belonging to railway, therefore, does not cover under the scope of commercial or industrial construction service. I find that the service provided in respect of roads, airports, and railways is not covered under the commercial or industrial construction service. In the present case, the railway land was leased out to Central Warehousing Corporation and Central Warehousing Corporation is paying rent as per the terms and conditions of the agreement. The tenders were floated by Central Warehousing Corporation for construction of warehouse and in response to the tenders the applicant constructed a warehouse for Central Warehousing Corporation. Hence it cannot be said that the applicant constructed a warehouse on behalf of the railway. Regarding contention of the applicant is that the contract is a works contract, the applicant had not produced the copy of contract between the applicant and Central Warehousing Corporation to show that construction is under contract.
6. In these circumstances, prima facie, it is not a fit case for waiver of amount of Service Tax. The applicant had already deposited an amount of Rs. 1,50,000/- hence are directed to deposit the remaining amount of Service Tax within a period of six weeks. On deposit of the above-mentioned amount, the pre-deposit of penalties are waived for hearing of the appeal. Adjourned to 25.2.2008 for reporting compliance.
(Dictated & pronounced in open Court)