Service Tax Not Leviable On Repairs Of School Building Run By Military Engineering Services: CESTAT

The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax not leviable on repairs of school building run by military engineering services. Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) opined that the services rendered to Military Engineering Services (MES) was in relation to Sainik School run by them and such building cannot be used for commerce and hence repairs of such building are beyond the scope of service tax. In this case, the assessee was undertaking certain works undertaken for municipal authorities; works of government department relating to water distribution systems as sub-contractors; Construction of Elevated Level Storage Reservoir (ELSR) for APIIC (SEZ); Construction of water supply facilities at industrial growth center for APIIC; Works undertaken for Military Engineering Services (MES) – Certain civil and electrical works for Korukonda Sainik School; Certain repairs to Municipal Authority. The work 'certain repairs to Municipal Authority' were classified under Works Contract Service (WCS), whereas, other works were classified under Management, Maintenance or Repair Service (MMRS). The Adjudicating Authority has confirmed the entire demand holding that services were classifiable under WCS, except for MMRS. The bench observed as far as classification of the composite contract is concerned, the same has been correctly adopted by the adjudicating authority as WCS, except for MMRS. The Tribunal opined that the activities of construction of water distribution system irrespective of whether it has been provided as contractor or as sub-contractor is in the nature of construction services and are not taxable as such constructions are for government department or municipalities and are in relation to drinking water supply. The demand on construction of water supply facilities at the industrial growth center for APIIC, is also not tenable as APIIC is a public authority and their primary objective is promotion of industries and not to engage in commerce, stated the Tribunal. The bench noted that as per the definition of WCS, construction services in relation to properties, not primarily for commerce, are beyond the scope of levy of service tax and even repair services in relation to non-commercial government building are kept outside the scope of levy. In view of the above, the Tribunal allowed the appeal. Case Title: M/s Chaitanya Constructions v. Commissioner of Central Excise & Service Tax, Visakhapatnam - I Case Number: Service Tax Appeal No. 3572 of 2012 Counsel for Appellant/ Assessee: D.V. Subba Rao Counsel for Respondent/ Department: M. Anukathir Surya Click here to read/download the order

Service Tax Not Leviable On Repairs Of School Building Run By Military Engineering Services: CESTAT

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Service Tax Not Leviable On Repairs Of School Building Run By Military Engineering Services: CESTAT

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