MANU/CS/0137/2010

Equivalent Citation: [2010]23STJ140(CESTAT-Ahmedabad), [2011]33STT468

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

WEST ZONAL BENCH, AHMEDABAD
Final Order No. A/855/2010-WZB/AHD, in Appeal No. ST/68/2009
Decided On: 24.06.2010
Appellants: Commr. of Service Tax
Vs.
Respondent: Shilpa Constructions Pvt. Ltd.
Hon'ble Judges/Coram:
Archana Wadhwa (J) and B.S.V. Murthy (T), Members
Counsels:
For Appellant/Petitioner/Plaintiff: R.S. Sarova, JDR
For Respondents/Defendant: Bishan R. Shah, C.A.
Case Note:
Refund - Construction of road - Commercial and industrial construction -
Respondent was in the business of providing services under commercial and
industrial construction - Respondent claimed refund for the value paid with
regard to construction of road which was excluded from the category of
Commercial and Industrial Construction under Section 65(25b) - Held,
value of construction of road is to be included in the value of the service
only when there is no segregation between the construction of commercial
complex and construction of the road - If contract recognises the two
activities as separate activities, even though the construction of the road is
in connection with the commercial complex, benefit has to be allowed -
Contract in the present appeal was for construction of road only - Whether
road constructed was for public utility or was a part of a commercial
complex is not relevant, in terms of Board's Circular No. B1/6/2005-
TRURefund - Unjust enrichment - Held, no separate service tax has been
shown in invoices raised against said claim - The client who was a PSU
claimed that no service tax was paid by them - CA's certificate was also to
the effect that no service tax was received by Respondent - Revenue's
appeal rejected
ORDER
Archana Wadhwa, Member (J)
1 . Being aggrieved with the order passed by Commissioner (Appeals) Revenue has
filed the present appeal. We have heard Shri R.S. Sarova, learned DR appearing for
the Revenue and Shri Bishan R. Shah, learned advocate appearing for the
respondents.
2 . The facts of the case, in brief, are that the respondents are in the business of
providing services under the category of "Commercial and Industrial Construction"
and are holding valid registration. The respondents filed an application for refund for

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Rs. 2,99,462/- on 17-10-2007 before the JAC on the grounds that they had paid it
wrongly for the construction of road which is exclude from the category of
"Commercial and Industrial Construction" as defined under Clause (25b) of the
Section 65 of the Finance Act, 1994. The said amount was paid against receipt of
amounts for construction services rendered to a particular client during the period
from 1-11-2006 to 31-3-2007. Since necessary documents evidencing exact nature of
the services rendered, period of refund and amount of claim were not submitted a
show cause notice was served to the appellants on 31-12-2007 on various grounds.
The Assistant Commissioner adjudicated the said show cause notice vide impugned
order wherein he rejected the claim for refund.
3. Being aggrieved with the rejection of refund claim appellant filed an appeal before
Commissioner (Appeals). By relying upon the Board's Circular No. B1/6/2005-TRU
dated 27-7-2005 they submitted that the service tax is required to be paid on the
construction of road only if the same is under a single contract for construction of
commercial complex. In as much as their agreement with the client was only in
respect of the road and the service tax in question has not been collected by them
from their clients, they are entitled to the refund of the service tax amount of Rs.
2,78,735/-.
4 . While dealing with the above contentions of the respondents, Commissioner
(Appeals) observed as under:
5.7 There is no dispute that the "road" is excluded from the purview of the
service tax as per the clear law provisions which reads as under:
(25b) Commercial or Industrial Construction Service" means-
(a) construction of a new building or civil structure or a part thereof;
or
(b) construction of pipeline or conduit; or
(c) completion and finishing services such as glazing, plastering,
planning, 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 fitting and
other similar services, in relation to building or civil structure; or
(d) repair, alteration, renovation or restoration 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,
airports, railways, transport terminals, bridges, tunnels and dams;
Reading of the above clearly indicates that all services related to construction
of roads are excluded from the purview of the construction service. The

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 Board's Circular quoted by the appellants strengthens such interpretation.
Para 14.4 and 14.5 are reproduced hereunder:
14.4 At present, services rendered for construction of commercial or
industrial building 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.
14.5 If the contract for construction of commercial complex is a
single contract and the construction of road is not recognized as a
separate activity as per the contract, then the service tax would be
leviable on the gross amount charged for construction including the
construction of roads.
As seen from the above it is clear that if the contract for roads is separate no
service tax is leviable. In the present case, the contract between the
appellants and their client is only for roads. The term "Driveway work" used
in the agreement is in relation to road work as can be seen from the
Annexure-2 to the agreement. The adjudicating authority has erred in
interpreting the description excavation, repair of pot holes, etc. as part of
construction service and not related to road work. Further, the narration
"Bitumen Carpet and Pavers Block" used in the invoices raised by the
appellants is also as per the agreement and is in relation to the construction
of the roads.
5 . By observing as above, he allowed the refund of tax on the ground that
construction of road does not call for payment of service tax and the refund is also
not hit by the principle of unjust enrichment in as much as copies of the relevant
invoice as also the certificate given by the client as also by the chartered accountant
show that such amount was not recovered by the respondent from the customer. The
said order of Commissioner (Appeals) is impugned before us.
6 . The Revenue is aggrieved by the order on the ground that as per the contract
entered into between the appellant and their customers there is no specific
description of "road". The respondent had in fact constructed the driveway in the
petrol pump of M/s. BPCL. Construction of driveway is only to facilitate those people
who come to petrol pump for filling fuel and such construction work cannot be
equated with construction of road so as to claim the exemption. They have further
contended that the exclusion of the construction service pertaining to road is to help
or facilitate general public in the public interest and its welfare. In as much as the
construction of driveway in the petrol pump is in the interest of the commercial
dealing for the petrol pump owner and not in the interest of general public, the same
cannot be excluded. Since driveway cannot be considered as road, Board's Circular
dated 27-7-05 is not applicable. Revenue has also challenged the grant of refund on
the ground of unjust enrichment.
7. After carefully considering the submissions made by both the sides we find that it
is an admitted fact by both the sides that the construction of road does not require
payment of service tax. The Revenue's only appeal is that construction of driveway
cannot be equated with the construction of road in as much as such driveway was not
for public utility purpose but the same was in connection with the petrol pump owned
by the owner.

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In this connection we find that the Board's Circular No. B1/6/2005-TRU dated 27-7-
05 is to the effect that - "if the contract for construction of commercial complex is a
single contract and the construction of road is not recognized as a separate activity
as per the contract, then the service tax would be leviable on the gross amount
charged for construction including the value of construction of road". As such it
becomes clear that the value of construction of road is to be included in the value of
the service only when there is no segregation between the construction of
commercial complex and construction of the road. If the contract recognizes the two
activities as separate activities, even though the construction of the road is in
connection with the commercial complex, the benefit has to be allowed. As such the
fact whether the road is being constructed for public utility purpose or as a part of a
commercial complex is not relevant, in terms of the Board's Circular above.
Accordingly we do not find any infirmity in the view adopted by Commissioner
(Appeals), in as much as the contract in the present appeal is admittedly for
construction of road only.
8 . As regards the unjust enrichment, we find that Commissioner (Appeals) has
referred to the fact that no separate service tax has been shown in the invoices raised
against their claim. We also take note of the fact that a certificate stands produced by
M/s. BPCL, who is a public sector undertaking to the fact that no service tax has been
paid by them. Chartered Accountant certificate also is to the effect that no service tax
has been received by the appellant. In these circumstances the bar of unjust
enrichment would not get attracted.
9. In view of our above discussions, the appeal filed by the Revenue is rejected.
(Pronounced in Court)

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