Dismissed

Ans Constructions Pvt. Ltd. v. the Commissioner of Service Tax, Delhi

Delhi HC2 Jul 2018SERTA/18/2018

Case brief

AI extract

What is this about?

The High Court of Delhi dismissed an appeal by Ans Constructions Pvt. Ltd. against the levy of service tax on landscaping activities. The court rejected the appellant's argument that the horticultural exclusion applies to management services, holding that the taxability of garden management falls under Section 65(64) of the Finance Act, 1994. Consequently, the appeal was dismissed.

What did the court decide?

The appeal filed by the appellant against the levy of service tax on garden management and maintenance activities was dismissed, and the pending application was also disposed of.

Ans Constructions Pvt. Ltd. Vs the Commissioner of… — GST and Indirect Tax | Delhi HC (2018)

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$~10

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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- SERTA 18/2018 & CM APPL. 25704/2018

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ANS CONSTRUCTIONS PVT. LTD. ..... Appellant Through: Mr. Jitin Singhal, Advocate.

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versus

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THE COMMISSIONER OF SERVICE TAX, DELHI ..... Respondent Through: Mr. Sanjeev Narula, Sr. Standing Counsel for respondent with Mr. Abhishek Ghai, Advocate.

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CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

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O R D E R

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% 02.07.2018

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The question of law certainly urged by the assessee in this appeal is:-

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“Whether the levy of service tax pursuant to the show cause notice in this case was justified?”

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The appellant/assessee is engaged in construction activities and registered with the Service Tax Authorities under the heading „Commercial or Industrial Construction Service‟. Alleging that the appellant/assessee was liable to pay service tax for the period 2008-09 to 2010-11, a show cause notice was issued. The assessee disputed the liability relying on Section 65(64) of the Finance Act, 1994. It contended strenuously that the proviso to Section 65(24b) of the SERTA 18/2018 Page 1 of 5

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Finance Act, 1994 which excepted the agricultural and horticultural activities, had to be read as part of the exclusion of such activities in relation to any other service related work. The Commissioner after considering the appellant‟s contentions by order-in-original dated 31.09.2012 confirmed the show cause notice and held that the assessee/appellant was liable to pay duty for the period in question. Thus, the show cause notice was confirmed and differential duty demanded for separate periods. In addition, the penalty of `1,35,12,730/- was imposed.

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Aggrieved, the assessee/appellant carried the matter in appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT after considering the submissions granted certain reliefs in respect to other activities and also in respect of the demands made for the extended period of limitation concluding that the assessee has neither misrepresented nor indulged in any fraudulent activities. The assessee is aggrieved by the findings of the CESTAT with respect to the landscape management activity carried on by it.

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The findings of the CESTAT, which the appellant is aggrieved of, are as follows:-

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“9. The appellants contested the tax liability with reference to landscaping horticultural work. They relied on the decision of the Tribunal in their own case - 2010 (17) STR 549 (Tri. Del.). We note that the Tribunal was dealing with the period prior to amendment of the tax entry with reference to management, maintenance and repair service. We note that subsequent to the

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SERTA 18/2018

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Page 2 of 5

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amendment in the tax entry with effect-from 16.06.2005 any service with reference to movable or Immovable property is liable to tax. The Id. Counsel contested the tax liability on the ground that they are not maintaining any immovable property. Managing plant and grooming garden cannot be considered as maintenance or repair service. We are not in agreement with the proposition of the appellant in this regard. The appellants are managing and maintaining gardens and undertaking various activities. The activities are covered by Clause (a) and (b) of Section 65 (64) of the Finance Act, 1994, which talks about management of properties immovable or not and maintenance or repair of properties immovable or not. Considering the wide scope of tax entry, we find that the appellants shall be liable to tax for their activities of managing and maintaining gardens and horticultural activities with reference to such gardens.”

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The assessee/appellant more or less reiterates its submissions with respect to the absence of any levy in regard to landscape activity contending that the commercial activity is in reality horticultural service. Reliance is placed on proviso to Section 65(24b) of the Finance Act, 1994. The appellant relies upon the judgment of the Supreme Court in „Commissioner of Central, Nagpur vs. Ballarpur Industries Ltd.‟, 2007 (215) ELT 489 (SC) and „Commissioner of Central Excise vs. Gas Authority of India Ltd.‟, 2008 (232) ELT 7 (SC).

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The demands in the present case were confirmed by the Commissioner - and later by the CESTAT, based upon the concurrent SERTA 18/2018 Page 3 of 5

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construction of Section 65(64) of the Finance Act which reads as follows:-

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“(64) “management, maintenance or repair” means any service provided by—

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(i) Any person under a contract or an agreement; or

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(ii) A manufacturer or any person authorised by him, in relation to,—

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(a) management of properties, whether immovable or not;

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(b) maintenance or repair of properties, whether immovable or not; or

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(c) maintenance or repair including reconditioning on restoration, or servicing of any goods, excluding a motor vehicle;

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Explanation : For the removal of doubts, it is hereby declared that for the purposes of this clause,— (a) “goods” includes computer software;

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(b) “properties” includes information technology software;”

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The rival activity which the assessee relies upon to claim that it is not liable to pay service tax is Section 65(24b) of the Finance Act, 1994 reads as follows:-

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“24(b) “cleaning activity” means cleaning, including specialised cleaning services such as disinfecting, exterminating or sterilising of objects or premises, of—

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(i) Commercial or industrial buildings and premises thereof; or

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(ii) Factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof,

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SERTA 18/2018

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but does not include such services in relation to agriculture, horticulture, animal husbandry or Page 4 of 5

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dairying;”

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What the assessee/appellant is thus contending is that the parliamentary exclusion of service in relation to agricultural, horticultural, animal husbandry etc. carved out in respect of a distinct item or subject of levy (cleaning activity) ought to be read into as an exclusion of another entry altogether i.e. Section 65(64) of the Finance Act which relates to “management, maintenance or repair” activity. In support of its arguments, the assessee has not relied upon any authority to say that the specific exclusion of one head or one commercial activity can generally be read in relation to other specific heads. Such an interpretation is also not supported by any principle of statutory construction and therefore has to fail.

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For the above reasons, the Court is of the opinion that the concurrent findings do not call for interference. No substantial question of law arises.

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The appeal is therefore dismissed along with pending application.

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S. RAVINDRA BHAT, J

A. K. CHAWLA, J

SERTA 18/2018

JULY 02, 2018 nn

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Ans Constructions Pvt. Ltd. v. the Commissioner of Service Tax, Delhi

Case brief

What is this about?

What did the court decide?

Ans Constructions Pvt. Ltd. v. the Commissioner of Service Tax, Delhi

Case brief

What is this about?

What did the court decide?

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