Commercial activity not chargeable to Service tax if provided in respect of facilities owned by Govt: CESTAT

The appellant paid service tax in the category of erection, commissioning and installation services but wanted to classify the services provided by him in the service description of commercial and industrial construction. The service provided was covered by the description of services given in a commercial and industrial construction service as defined in Section 65 (25b), however, since the said services are provided to Government facilities which are not of commercial nature, the same do not fall under the category of commercial or industrial construction services as defined in Section 65 (25b).  It is seen that the installation of chairs in a stadium would clearly be an activity similar to the activity of acoustic application or fittings or of the nature of fencing and railing.

The Tribunal concluded that stadiums were deemed to be public utilities as Sports Stadia is used for public purpose. Even in a Children Park, entry fee is levied for maintenance of the park, so, merely because some amount is charged for using the Park, it cannot be a commercial or industrial construction. Adopting the same logic, the Sports Stadia in the present case is also a non-commercial construction for use by the public. Therefore, the tribunal was prima facie of the view that the Sports Stadium constructed for conducting Commonwealth Games, is a non-commercial construction. In the case of B.G. Shirke Construction Technology Pvt. Ltd. it was held that, “the activity of affixing chairs in a stadium would be covered under the description of service covered under commercial or industrial construction service, but not chargeable to tax for the reason that the structure for which the said activity has been undertaken is not of commercial nature. The activity of laying of Synthetic Athletic Track Surface is akin to the activity of floor and wall tiling, wall covering and wallpapering. The activity is of civil nature and covered by the activities described in the definition of commercial or industrial construction service, however, since the same have been provided in respect of sports facilities owned by Government, State or Centre, the same would not be chargeable to tax.”

Since the issue of unjust enrichment, limitation and the implication of the decision of the Apex Court in the case of ITC Ltd. has not been examined by the lower authorities, it was sent back to the original Adjudicating Authority.

Therefore, the appeal is partly allowed. In so far as the taxability of service provided is concerned it is held that the services provided by the appellant are not taxable. For decision on the other issues, the matter is remanded back to the original Adjudicating Authority. The appeal is partly allowed, in the above terms, by way of remand.