Recently, the Mumbai CESTAT in the case of The Carpenters v Commissioner of C.Ex & ST, Pune-III/Mumbai-III 2014 (36) STR 1137 (Tri-Mumbai) has held that activities undertaken on existing building which is in already in use, the same would amount to renovation or restoration or alteration or repair as per the definition under Section 65(25b) of the Finance Act, 1994.
In the present case, the Appellant is engaged in activities of interior work such as plastering of walls, tiling of floors, carpentry work, partition work, work relating to bathrooms/toilets etc. and it was question for decision whether the activities undertaken by the Appellant would fall under clause (d) of Section 65 (25b) of the Finance Act, 1994 as claimed by the Appellant of would fall under the clause (c) of the said Section 65 (25b) of the Finance Act, 1994 as claimed by the Revenue.
Clause (c) and (d) of Section 65(25b) is reproduced below:-
“Commercial or Industrial Construction” means:
(c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic application or fittings 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, rail-ways, transport terminals, bridges, tunnels and dams.
It was observed by the Hon’ble CESTAT that activities of repair, alteration, renovation or restoration undertaken by the Appellant comes under clause (d) and not under clause (c) and, therefore, the Appellant is eligible for the benefit of Notification No. 1/2006-ST and to attract clause (c) the same has to be undertaken in respect of new or unfinished building.
Further it was also observed, that if the contract were entered into prior to 1 June 2007, they would be governed by the provisions of Section 65(25b) of the Finance Act, 1994 relating to ‘Commercial or Industrial Construction Service’. Whereas, if the contract were entered into on or after 1 June 2007, then in that case they would be covered under the provision of ‘Work Contract Service’.
Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
Central Council Member of ICAI (2013-16)
Former Chairman NIRC of Institute of Chartered Accountants of India
Former Chairman NIRC of Institute of Cost Accountants of India
Author of “An Introduction to Service Tax” & “Comprehensive Guide to Service Tax”
M: 9810103611 E: firstname.lastname@example.org