Order Date – 06 March 2024

Parties: Kasukurthi Sujatha Vs Commissioner of Central Tax Secunderabad

Facts –

• The Appellant, Kasukurthi Sujatha, is a works contractor and mainly engages in laying of optical fibre lines, gas pipelines for GAIL, construction of reservoir, etc., either as main contractor or subcontractor. They were not paying service tax on these activities as all these activities are either for government authority or for Government Company.
• A demand has been confirmed on the appellant for service tax under categories of “Commercial or Industrial Construction Service” (CICS),” Works Contract service” (WCS) & “Site Formation and Clearance service” for the period of 2005-06 to 2009-10.

Issue –

• Whether the appellant is liable to discharge Service Tax under categories of CICS, WCS?

Order –

• The Tribunal observed that the work of laying pipelines under the head ‘works contract service’ done for Gas Authority of India Ltd (as the subcontractor) is concerned, it was held that the amount received prior to 01.06.2007 is not taxable. It was also hold that the Appellant is entitled to pay tax under the composition scheme and the same cannot be denied for having not opted for.
• It was held the activity of construction of fire stations is of non-commercial nature and hence the same is held as exempt. So far the activity of construction of reservoirs and CNG stations is concerned, held that demand is bad for the period prior to 01.06.2007. After 01.06.2007, Appellant shall be entitled to abatement of 67% of the gross value and also be entitled to the benefit of paying tax under the composition scheme.
• The Tribunal also held that free supply of material, if any, from the service receiver cannot be added to the gross turnover of the Appellant, as held by the Apex Court in the case of Bhayana Builders. Further the Appellant was registered with the department and have been filing the returns regularly and also maintains proper records of the transactions. The issue involved is wholly attributable to interpretation of the tax provisions. Accordingly, held that the extended period of limitation is not available to revenue.
• The appeal is allowed.