"CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH – COURT No. I Service Tax Appeal No. 41957 of 2015 (Arising out of Order-in-Original No. 09/2015 (Commr.) dated 29.05.2015 passed by Commissioner of Central Excise, Central Revenue Building, NGO-‘A’ Colony, Tirunelveli – 627 007) Shri S.R. Karthik ...Appellant No. 820/W2, Sankaran Kovil Road, Rajapalayam – 626 117. Versus Commissioner of GST and Central Excise ...Respondent Tirunelveli Commissionerate, Central Revenue Building, NGO-‘A’ Colony, Tirunelveli – 627 007. APPEARANCE: For the Appellant : Ms. Aparna Nandakumar, Advocate For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative CORAM: HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL) FINAL ORDER No. 40803 / 2025 DATE OF HEARING : 27.02.2025 DATE OF DECISION : 07.08.2025 Per Mr. VASA SESHAGIRI RAO Brief facts are that Shri S.R. Karthick, Rajapalayam-SRK in short (hereinafter referred to as the “Appellant”) is registered with the Central Excise Commissionerate, Tirunelveli on 01.02.2005 for providing Commercial or industrial construction service. Based on 2 ST/41957/2015 intelligence gathered by the department that SRK had collected Service Tax for the services rendered by him but not paid to the Govt., the accounts and contracts of the appellant were scrutinized and found that they were providing construction services such as road works, culvert, railway siding etc. and also had not discharged service tax on the consideration received. On enquiry, the appellant replied that roads are exempted from service Tax and the construction of educational institutions is also exempted from payment of service tax as per Board Circular No.80/10/2004- ST dated 17.09.2004. That most of their customers are Industries and public charitable trusts having Section 12AA registration under Income Tax Act. The appellant submitted records and relevant particulars for the period 01.10.2008 to 30.06.2012 to the Department and contended that they are not liable to pay service tax. 1.2 However, the Department was of the view that for the period 01.10.2008 to 30.06.2012 the appellant has constructed roads and educational institutions which are commercial in nature and therefore the appellant is liable to pay service tax. The Show Cause Notice No. 112/2013 dated 23.10.2013 was issued for the above period invoking the extended period proposing to demand service tax under Works Contract Services along with interest and also for 3 ST/41957/2015 imposing penalties. Further, Section 73 A of Finance Act was invoked for recovery of Service Tax collected but not paid to Government. 2. After due process of Law, the case was Adjudicated by the Commissioner of Central Excise, Tirunelveli vide Order-in-Original No. 09/ST/COMMR/2015 dated 29.05.2015 in which the demands as proposed in the SCN were confirmed along with applicable interest and penalty was imposed. 3. Aggrieved by the above order, the appellant has filed an Appeal before this Tribunal. 4. The Ld. Counsel Ms. Aparna Nandakumar have appeared and argued for the appellant and made the following submissions that: - i. The Appellant is carrying out construction activity of commercial construction of factories, civil structures, roads etc., and is rendering construction services to various municipalities, charitable institutions, hospitals, educational institutions, and has discharged the service tax liability. ii. The present appeal is against the denial-of-service tax exemption on Construction services undertaken to 4 ST/41957/2015 charitable institutions, hospitals, educational institutions, and also to Industrial establishments for construction of roads for the year 2008 to 2103. iii. SRK has provided construction services to two types of end-users i.e., 1. Industrial Establishments and 2. Educational Institutions and Hospital /Nursing home construction for Trusts and others. iv. The larger period of limitation cannot be invoked in this case as there is no suppression, wilful misstatement or contravention with an intent to evade tax and submitted several case Laws in support of their claim. v. Section 65(25b) of the Finance Act, 1994 specifically connotes that the service recipient of the construction service has to be “primarily “engaged in commercial activity vi. They have referred to Service Tax Circular No. 80/10/2004-ST, dated 17/09/2004 in which the Department has clarified that the leviability of service tax would depend upon whether the building or civil structure is “used, or to be used” for commerce or industry and that constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, not being commercial in nature. 5 ST/41957/2015 vii. The Hon’ble CESTAT, Principal Bench, Delhi in the case of Jyoti Sarup Mittal Vs. CCE [2017 (3) G.S.T.L. 478 (Tri-Del.)] has held that when construction Services are Undertaken for educational institutions, Service tax is not leviable viii. The Service Tax Circular No.86/4/2006-S.T., (F.No.137/71/2006-CX.4) dated 01.11.2006 clarified that a “commercial Concern” primarily engaged in commercial Activities is having profit as its Primary aim. It is not one/few isolated activities which determine Whether or not an institution is a commercial concern, but it is the totality of its activity that determines the commercial nature of an institution. This read in consonance with the Service Tax Circular dated 10/09/2004 gives the legal position that Construction of a school or College or an educational institution would fall completely outside the Purview of service tax levy. ix. Reliance was placed on the case of R. Ramadas Vs. Joint Commr. of C.EX., Puducherry [2024 (5) TMI 197- CESTAT CHENNAI] wherein it was held that service tax exemption on road construction and maintenance applies irrespective of whether the road is for public or private use. 6 ST/41957/2015 x. It was further submitted that the reliance placed by the respondent on CBEC Circular No. B1/6/2005-TRU dated 22/07/2005 is incorrect, as the appellant herein had entered into separate contracts for the construction and repair of roads concerning all three units of Madras Cements Ltd. The impugned order fails to appreciate that these were independent contracts, and therefore, the principles laid down in the said CBEC Circular do not apply to the Appellant’s case. xi. Relied upon the decision of CESTAT, in Commissioner of Service Tax Vs. Shilpa Construction Pvt. Ltd. [2010 (19) STR 830 (CESTAT-Ahmedabad)], that where construction of roads is a distinct and independent activity, it qualifies for exemption, even if the roads are located within a commercial complex. Applying this principle, the road construction undertaken by the appellant for Madras Cements Ltd. qualifies for exemption under Notification No. 24/2009-ST dated 27/07/2009. 5. The Ld. Authorized Representative Shri Anoop Singh argued for the Department and first reiterated the findings in the impugned order and submitted that the Appellant is not covered by any exemption Notification during the relevant period as claimed by them, and the 7 ST/41957/2015 demand is sustainable on merits. Further it was submitted by the Ld. A.R that non-payment of service tax would not have come to light but for the investigation conducted by the Department. Further, the Appellants have collected Service Tax from industrial customers but did not deposit the same to the revenue and therefore suppression of facts with an intent to evade payment of service tax is evidenced and therefore the invocation of extended period is legal and proper. Ld. A.R finally prayed that the appeal may be dismissed. 6. We have heard both sides and considered the rival contentions including the case laws relied upon. 7. In the reply to the Show Cause Notice dated 21.12.2013, the Appellant has furnished a list of bill wise considerations received for various activities which are detailed below: - 2008-09 Construction work for M/s. Madras Cements Ltd., Alathiyur 1. Bill Value of Rs. 66,98,103/- All of them relate to road construction and hence would be a construction activity, qualifying for exemption. 2. Bill Value of Rs.2,87,990/- The bill value represents supplying, laying and rolling kodukur gravel for Clinker yard formation. The work was described as construction of road leading to Clinker yard it would qualify for exemption. 8 ST/41957/2015 3. Bill Value of Rs. 99,865/- This represents kiln maintenance and repair of kiln. The bills term this service as \"kiln shutdown works\". The work involved only maintenance and repair and does not involve any construction activity. Thus this service falls under the category of the taxable service of Management, Maintenance and repair service under Section 65(105)(zzg) of the Finance Act, 1994. 4. Bill Value of Rs. 38,817/- This only represents purchase value of electric chimney. Since no service is involved, this falls outside the scope of the Finance Act, 1994. 5. Bill Value of Rs.4,96,323/- This represents hire charges collected from M/s. Madras Cements Ltd towards hire of one JCB and tractor Even though the JCB and tractor are being lent to their customer namely M/s Madras Cements Ltd., they provided the driver for the JCB. The wages of the driver were provided by the Querist only. In effect, the control and lien over the equipment was still retained by me Querist only 6. Bill Value of Rs. 2,01,935/- This site preparation work is part of construction work of road, it can get exemption vide Notification No 17/2005- S. T. dated 7/06/2005. 7. Bill Value of Rs 69,040/- This related to construction of CC pavement to coal tippler ramp, which is essentially a road work. This is an exemption activity. 8. Bill Value of Rs.61,300/- This represents temporary restoration work of railway siding, as even maintenance and repair of roads quality for exemption for exemption for assessment period, it will exempt. 9. Bill Value of Rs. 6,06,710/- This represents temporary residential quarters for packing plant workers of M/s. Madras Cements Ltd., Construction of Staff quarters is a works contract service falling under \"Construction of residential complex\" service Section 65(105)(zzg) of the Finance Act, 1994. However, this services would attract service Section 65(105)(zzg) of the Finance Act, 1994. However, this services would attract service tax only if the construction is done on twelve or more residential units. The staff quarters are 9 ST/41957/2015 only 3 in number. In such event, service tax on the above bill value will not be attracted. 10. Bill Value for Rs 8,00,000/- This represents advance received for lorry yard construction and silicone construction and also for road construction. While advance for silo cone construction is eligible to service tax, the other advance received viz, for road and lorry yard, is exempt. 11. Bill Value for Rs.8,34,357/- This relates to lorry parking yard work. This amount would qualify for exemption. 12. Bill Value for Rs.82,350/- This relates to construction of compound wall. This relates to road work and hence is exempt. 13. Bill Value for Rs. 1,00,866/- This relates to construction of pipe culvert at mines. The term \"culvert\" has been defined by the Chambers Twentieth Century dictionary as “an arched channel for carrying water beneath a road, railway etc.,\". Thus as it forms part of road construction, this also qualifies for exemption. 14. Construction work for M/s. Madras Cements Ltd., Ariyalur It relates to road work, it will qualify for exemption. Construction work for M/s Madras Cements Ltd, R.R.Nagar 15. Bill Value for Rs.25,30,916/- This represents construction of retaining wall for ramp at mines. A ramp can be described as a road provided it is not inside a building or superstructure. If it is a pathway, this construction will qualify for exemption. 16. Bill Value for Rs. 72,20,573/- Construction of B. T.road and is therefore exempt. 17. Bill Value for Rs. 1,16,445/- This relates to extension of toilet in Vidhya Mandir School, run by M/s. Madras Cements Ltd. As the construction relates to school is exemption. 18. Bill Value Rs. 1,52,105/- Both relates to construction of pipe culvert at mines. This qualifies exemption. 10 ST/41957/2015 2009-10 19. Bill Value for Rs.25,12,148/- All of them relate to road construction and hence would be a construction activity, qualifying for exemption. Tax wrongly collected and paid is eligible for refund. 20. Bill Value of Rs.8,50,646/- This relates to construction of pipe culvert at mines. This exempt for the reasons stated in opinion for assessment period 2008-09. The tax collected is eligible for refund. 21. Bill Value for Rs 2,74,563/- This relates to supply and filling of red soil for lorry yard. This also qualifies for exemption as this site preparation service relates to construction of road. This is eligible for exemption. 22. Bill Value of Rs. 90,475/- This represents hire charges collected from M/s. Madras Cements Ltd towards hire of one JCB and tractor. For the reasons stated in opinion for assessment period 2008-09, the service is taxable and the amount collected by way of tax and cess have to be paid into Treasury. 23. Bill Value of Rs.7,40,550/- This represents construction activity of lab and IT building. This is taxable. 24. Bill Value of Rs. 1,42,500/- This represents supplying and levelling on school hockey ground. Work at school hockey ground Lis also mentioned. However, regarding this service, there is no specific exemption either by way of notifications, circulars or judicial pronouncements to my knowledge. Hence, tax collected by us has to be paid over to the Treasury. 25. Bill Value of Rs. 17,344/- This value represents supply and levelling top soil for garden and factory. Again, this is a taxable service. 26. Bill Value of Rs.5,213/- This qualifies for exemption in the definition of site preparation and clearance service itself under \"Site Preparation and clearance service\". (Section 65(105)(zzz)) as the section itself provides for exemption for water bodies drilling. This is eligible for exemption and is also refund of the tax paid. 27. Bill Value of Rs. 38,779/- 11 ST/41957/2015 This is cleaning service though in relation to cleaning of bushes is performed for a commercial concern and is done in the premises of the commercial concern. Hence it would be taxable 28. Bill Value of Rs 38,779/- This represents kiln maintenance and repair of kiln. The bills term this service as \"kiln shutdown works\". The work involved only maintenance and repair and does not involve any construction activity. Thus this service falls under the category of the taxable service of Management, Maintenance and repair service under Section 65(105) (zzg) of the Finance Act, 1994. 29. Bill Value of Rs. 11,430/- This relates to road work and hence exempt. Tax wrongly collected and paid is eligible for refund. 30. Bill Value of Rs.26,000/- This relates to laying of foundation for temple. As this construction is for religious purpose, this amount is exempt. 31. Construction work for M/s. Madras Cements Ltd., Ariyalur It relates to road work, it will qualify for exemption. Construction work for M/s. Madras Cements Ltd., R.R.Nagar 32. Bill Value for Rs.2,14,769/- This represents construction of retaining wall for ramp at mines. A ramp can be described as a road provided it is not inside a building or superstructure. If it is a pathway, this construction will qualify for exemption. 33. Construction work for Rani's House This relates to construction of a single residential unit commenced in 2009-10. This also qualifies for exemption. 34. Construction work for Rajapalayam Rotary Trust The Rajapalayam Rotary Trust is an educational and charitable trust. The work executed for this trust during assessment period relates to construction of school. The querist has raised a query as to whether this construction activity would qualify for exemption. 35. Construction work for RajapalayamKshtriyaRajukkal Sinthalapadi Thayathiyargal Trust The Hon'ble Supreme Court in the case of Commissioner of Sales tax Vs Sai Publication 25 Fund (126 STC 288), has held that same of religious books by the Sai Trust is only incidental to the main charitable and religious activity and that in order for a concern to be called commercial, it must carry on an activity that termed as 12 ST/41957/2015 \"trade\" even if there is no profit. The discussion with Querist has made it quite clear that the above mentioned trust is for charitable purpose and hence the construction in relation to this trust cannot come within the ambit of Section 65(105)(zzq). Hence this work is fully exempted from Service Tax. 36. Construction work for M/s. S.A.P.R.Construction (P) Ltd This represents the sub-contracting work done for their sister concern and this relates to construction of Nursing College. So, the work is also exempted. 37. Construction work for Chinmaya Vidhyalaya School The bill value for this work is Rs. 1,32.003/- This represents construction of a school. Again, for the same reasoning mentioned in (4) above this value is also exempt. 38. Construction work for P.A.C.Ramasamy Raja Educational Trust The names of the trusts are indicative enough to show that the entities are charitable organisations and not commercial concerns. So construction undertaken or service provided to these entities will qualify for exemption. 39. Construction work for N.A.Manjammal Polytechnic College This is construction of educational institution. This also is eligible for exemption. 2010-11 Construction work for M/s. Madras Cements Ltd, Alathiyur 40. Bill Value of Rs. 6,30,295/- I have gone through the items which add upto give the consolidated value of Rs.6,30,295/- This relates to road batch work and lorry yard Phase I. For the same reasoning given in opinion for assessment period 2007- 08, this qualifies for exemption. The Querist has wrongly collected tax and cess on this service. They are eligible for refund on the wrongly collected service tax and cess. 41. Bill Value of Rs.20,715/- This represents kiln maintenance and repair of kiln. The bills term this service as \"kiln shutdown works\". The work involved only maintenance and repair and does not involve any construction activity. Thus this service falls under the category of the taxable service of Management, Maintenance and repair service under Section 65(105)(zzg) of the Finance Act, 1994. However, 13 ST/41957/2015 the service tax has to be paid on the entire amount as abatement provisions do not apply to this taxable service. The querist has rightly collected service tax and cess. 42. Bill Value of Rs. 6,34,017/- This is mentioned in the accounts statement as \"playground work\". This is taxable service falling under \"Site preparation and clearance service\" (Section 65(105)(zza)). This service includes soil stabilisation and top soil striping work and also land reclamation work. Work at school hockey ground is also mentioned. However, regarding this service, there is no specific exemption either by way of notifications, circulars or judicial pronouncements to my knowledge. Hence tax collected by the Querist has to be paid into the Treasury. 43. Bill Value of Rs.2,40,609/- This represents hire charges collected from M/s. Madras Cements Ltd towards hire of one JCB and tractor. For the reasons stated in opinion for assessment period 2008-09, this service is taxable and the amount collected by way of tax and cess have to be paid into the Treasury. 44. Bill Value of Rs.65,353/- This is termed as cleaning work and includes cement cleaning, tunnel spillage cleaning, limestone cleaning and the like. As per the definition of cleaning activity given in Section 65(24b) of the Finance Act, 1994, cleaning of the premises of commercial and industrial buildings including cleaning factory, tank, reservoir etc., will come under this taxable service (Section 165(105)(zzzd). Hence this amount is taxable and the service tax collected has to be paid to the Government. 45. Bill Value of Rs.6,32,853/- This is only road work. Hence this qualifies for exemption. The tax collected wrongly is eligible for refund. 46. Bill Value of Rs.5,76,520/- This relates to construction of pipe culvert at mines. This is exempt. The tax collected is eligible for refund. 47. Bill Value of Rs. 1,43,000/- This value represents supply and levelling top soil for garden and factory. Again, this is a taxable service falling under \"Site Preparation and clearance service\" (Section 65(105)(zzza)). This service includes soil stabilisation and top soil striping work and also land reclamation work. 48. Bill Value of Rs. 1,80,076/- 14 ST/41957/2015 This works contract activity relates to construction of staff quarters. This construction is less than 12 residential units. Therefore, it is exempt. 49. Bill Value of Rs. 3,11,513/- This represents construction of toilet for lab building. It related to factory. I accept this is taxable. 50. Bill Value of Rs 25,543/- This has been described as construction of masonry wall for drain. This is part of construction 30 work of road, it can get exemption vide Notification no. 17/2015-ST dated 7/06/2005. 51. Bill Value of Rs. 1,100/- This represents construction of temporary pit for waste water collection at lorry yard. This qualifies for exemption in the definition of site preparation and clearance service itself under \"Site Preparation and clearance service\" (Section 65(105) (zzza)) as the section itself provides for exemption for water bodies drilling. 52. Construction work for M/s. Madras Cements Ltd, Rajapalayam The entire bill value of Rs. 24.350/- relates to pipe line maintenance work. As this will fall under management, maintenance and repair work, this bill amount is taxable. There has been no collection of tax for this amount. 53. Construction work Rajapalayam Rotary Trust The Rajapalayam Rotary Trust is an educational and charitable trust. The work executed for this trust during assessment period relates to construction of school. The querist has raised a query as to whether this construction activity would qualify for exemption. 54. Construction work for Rajapalayam Kshtriya Rajukkal Sinthalapadi Thayathiyargal Trust The Hon'ble Supreme Court in the case of Commissioner of Sales tax Vs Sai Publication Fund(126 STC 288), has held that same of religious books by the Sai Trust is only incidental to the main charitable and religious activity and that in order for a concern to be called commercial, it must carry on an activity that termed as \"trade\" even if there is no profit. The discussion with Querist has made it quite clear that the above mentioned trust is for charitable purpose and hence the construction in relation to this trust cannot come within the ambit of Section 65(105)(zzq). Hence this work is fully exempted from Service Tax. 15 ST/41957/2015 55. Construction work for M/s. S.A.P.R.Construction (P) Ltd This represents the sub-contracting work done for their sister concern and this relates to construction of Nursing College. So, the work is also exempted. 56. Construction work for Chinmaya Vidhyalaya School The bill value for this work is Rs.4,770/- construction of a schools this value is also exempt. 57. Construction work for P.A.C.Ramasamy Raja Educational Trust and Construction work for Pimasugan Education Trust The names of the trusts are indicative enough to show that the entities are charitable 33 organisations and not commercial concerns. So construction undertaken or service provided to these entities will qualify for exemption. 2011-12 58. Construction work for M/s. J.Rajesh House Work This relates to construction of a single residential unit commenced this year. This qualifies for exemption as it falls below the threshold limit. 59. Construction work for M/s. Madras Cements Ltd, Alathiyur There is only bill and this relates to road work. Hence the entire amount is exempt. However, service tax has been wrongly collected and paid. 60. Construction work Rajapalayam Rotary Trust The Rajapalayam Rotary Trust is an educational and charitable trust. The work executed for this trust during assessment period relates to construction of school. The querist has raised a query as to whether this construction activity would qualify for exemption. 61. Construction work for Rajapalayam Kshtriya Rajukkal Sinthalapadi Thayathiyargal Trust The Hon'ble Supreme Court in the case of Commissioner of Sales tax Vs Sai Publication Fund(126 STC 288), has held that same of religious books by the Sai Trust is only incidental to the main charitable and religious activity and that in order for a concern to be called commercial, it must carry on an activity that termed as \"trade\" even if there is no profit. The discussion with Querist has made it quite clear that the above mentioned trust is for charitable purpose and hence the construction in relation to this trust cannot come within the ambit of Section 65(105)(zzq). Hence this work is fully exempted from Service Tax. 16 ST/41957/2015 62. Construction work for M/s. S.A.P.R. Construction (P) Ltd. This represents the sub-contracting work done for their sister concern and this relates to construction of Nursing College. So, the work is also exempted. 63. Construction work for Sri Krishna Hospital This relates to construction of hospital. A hospital not a commercial concern, this amount qualifies for exemption. 64. Construction work for Rajapalyam Municipality The taxable service of Commercial construction Section 65(105)(zzq) forms part of \"work contracts service\" Section 65(105(zzza). Hence the elaborate definition of \"Commercial construction service\" has to examined in order to find out whether the particular works contract service rendered is a taxable service or not. 65. Construction work for N.A. Manjammal Polytechnic College Construction of educational institution is eligible for exemption. 66. Construction work for Vishnu Shankar Mills Ltd This is a taxable service as it falls under Commercial construction and works contract service. The tax and cess on the bill value of Rs.5,15,279/- has been rightly collected. 67. Construction work for M/s. Vishal Industries The bill value relates to construction of factory building. This is a taxable service as it falls under Commercial construction and works contract service. The tax and cess on the bill value of Rs.6,00,000/- has been rightly collected. 68. Construction work for M/s. Mukesh Honda The bill value to construction of Honda showroom. This is a taxable service as it falls under Commercial construction and works contract service. The tax and cess on the bill value of Rs. 12,90,000/- has been rightly collected. 69. Construction work for Rani's House This related to construction of single residential unit commenced this year. This qualifies for exemption as it falls below the threshold limit. On a perusal of these submissions furnished by the Appellant, they are too brief to come to any conclusion 17 ST/41957/2015 regarding the taxability. A scope of each work undertaken and the nature of service rendered has to be analyzed in order to decide about appropriate classification of the service rendered by the Appellant. The Appellant himself had admitted regarding the taxability for the service provided under consideration received mentioned at Sl.Nos. 3, 22, 23, 24, 25, 27, 28, 41, 42, 47, 49, 52, 66, 67, 68 above. However, it is noted that the Appellant has collected service tax from the service recipients but it is not clear whether the same has been paid to the credit of the Government Account. 8. The Adjudicating Authority has framed the following questions for decision in this dispute: - i. Whether the activities carried out by SRK are taxable services classifiable under \"Works Contract Service\", \"Site formation and clearance, excavation and earthmoving and demolition Service\", \"Supply of Tangible Goods Service\", “Man Power Recruitment or Supply Agency Service\" and \"Cleaning service\" or other taxable services and chargeable to service tax in terms of the provisions of erstwhile Sec. 66 and the present Sec.66B of the Act? ii. Whether the exemption from service tax claimed by SRK on the ground that most of the works contract 18 ST/41957/2015 executed by him were laying of roads and construction of buildings meant for non-commercial purpose i.e., educational institutions, hospitals run by charitable organizations is factually correct and legally permissible? iii. Whether the demand of service tax for the extended period of five years under proviso to Sec. 73(1) of Finance Act, 1994 is correct? And, iv. Whether penalty is imposable under Sec. 76,77 and 78 of the Act for contravention of various provisions of law? 9. We note that the Assessee has registered for provision of Construction services in respect of Commercial or Industrial Building and Civil Structures from 01.02.2005; filed ST-3 Return for the half year October, 2004 to March, 2005 i.e. prior to the demand period, and did not file ST-3 Returns thereafter. 10. The recipients of the major part of the services of construction of Commercial or Industrial Building and Civil Structures, roads, compound wall etc., are Madras Cements, Sudarshanam Spg Mills, Ramaraju Surgical Cotton Mills, Vishaal Industries, N.R. Krishnamoorthy Raja & VSML. For all these clients, the activity includes Laying of roads within the 19 ST/41957/2015 factory premises, construction of Culverts, repair of roads, repair of railway siding, construction of residential staff quarters, Lorry yard construction, construction of compound wall, retaining wall at ramp at mines, RCC Framed Plant Room Building, Construction of cement platform etc. The impugned order has classified the services under works contract. All the works relating to roads pertain to the units of M/s. Madras Cements and the construction of roads was either in factory premises or at the mines and these activities are held as Works Contract Services in the impugned order as there is transfer of property in goods a fact which is not disputed. 11.1 We note that Works contract service (WCS) was added to the list of taxable services with effect from 1 June 2007 and the scope of this service has been expanded from time to time through changes/amendments in the Finance Act, 1994. From 1st June 2007 to 30th June 2012, ‘Works contract service’ in Section 65(105)(zzzza) of the Finance Act, 1994 is defined as, “Any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. For the purposes of this sub‐clause, “works contract” means a contract where, i)transfer of property in goods involved in execution of such contract is leviable to tax as a sale of goods, and 20 ST/41957/2015 ii. such contract is for the purposes of carrying out: ‐ a. …………. or b. construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or c. construction of a new residential complex or part thereof; or d. completion and finishing services, repairs, alteration, renovation or restoration of, or similar services in relation to (b) and (c); or e. …………………” 11.2 From 1st July 2012, Section 65(44) of FA 1994 defines \"service\" to mean any activity carried out by a person for another for consideration, and includes a declared service while excluding a few activities such as an activity which constitutes merely a transfer of title in goods or immovable property, by way of sale, gift or in any other manner. The service portion in the execution of a works contract is a declared service as per Section 66E(h) of the Act. Section 65B of the Finance Act, 1994, deals with “Interpretations”. Clause (54) of Section 65B reads. Works contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or 21 ST/41957/2015 immovable property or for carrying out any other similar activity or a part thereof in relation to such property. However, services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a road, bridge, tunnel or terminal for road transportation for use by general public were exempted vide notification dated 20 June 2012.” 11.3 Commercial or industrial construction is defined under Section 65(25b) of the Act, which reads as under: - “(25b) [“commercial or industrial construction”] means— (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, 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 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, railways, transport terminals, bridges, tunnels and dams;” 22 ST/41957/2015 11.4 A bare reading of the statutory provisions would make it clear that the scope of services provided, inter alia, in respect of roads, are specifically excluded under works contracts or construction services of Commercial or Industrial buildings. 11.5 Further, we note that the taxability of construction of roads has been decided in favour of the taxpayer in the following cases: - i. Commr. of Cus. & C.Ex., Raipur vs. M/s. National Project Construction Corpn. Ltd. [2020 (42) G.S.T.L. 75 (Tri. – Del.)]; ii. Rajendra Singh Bhamboo v. Commr. of C.Ex. & S.T., Jaipur- I [2019 (22) G.S.T.L. 278 (Tri. – Del.)]; iii. M/s. TVS Interconnect Systems Ltd. v. Commissioner of Central Excise & Service Tax, Madurai [Final Order No. 41686/2019 dated 12.12.2019 – CESTAT, Chennai – 2019 SCC Online CESTAT 8941] iv. Jagdish Prasad Agarwal v. Commissioner of Central Excise, Jaipur-I [2017 (3) G.S.T.L. 455 (Tri. – Del.)] 11.6 The Appellant has relied upon the decisions of the Tribunal in the following cases in support of their claim that road construction is exempted from payment of service tax: - i. Commissioner of Service Tax v. M/s. Shilpa Construction Pvt. Ltd. [2010 (19) STR 830 (CESTAT-Ahmedabad)], ii. R. Ramadas Vs. Joint Commr. of C.EX., Puducherry [2024 (5) TMI 197-CESTAT CHENNAI] 23 ST/41957/2015 In the case of Commissioner of Service Tax v. M/s. Shilpa Construction Pvt. Ltd. [2010 (19) STR 830 (CESTAT- Ahmedabad)], it was clarified that where construction of roads is a distinct and independent activity, it qualifies for exemption, even if the roads are located within a commercial complex. Applying this principle, the road construction undertaken by the appellant for Madras Cements Ltd. appears to qualify for exemption under Notification No. 24/2009-ST dated 27.07.2009. But, it is needed to examine the scope of work and service activity rendered to arrive at the conclusion that consideration is received for repair or construction of the Roads. 11.7 We also refer to the decision of this Tribunal in the case R. Ramadas Vs. Joint Commr. of C.EX., Puducherry [2024 (5) TMI 197-CESTAT CHENNAI] passed by CESTAT Chennai in which the appellant had rendered inter alia the services of road construction in private commercial premises of Neyveli Lignite Corporation, and thus claimed the benefit of Notification No. 24/2009-ST ibid. The Notification No.24/2009- ST dated 27.7.2009 provides for exemption of service tax on management, maintenance or repair of roads and the new Section 97 introduced vide Finance Act, 2012 gave retrospective amendment to this notification w.e.f. 16.06.2005. The above said Notification No.24/2009-ST or 24 ST/41957/2015 amendment Notification No.54/2010-ST dated 21.12.2010 and new Section 97 of Finance Act, 2012 does not state in any place that \"the exemption from payment of service tax is only with respect to public utility roads\". In this regard, we note that the orders relied upon in the case of Rajendra Singh Bhamboo Vs. CCE & ST Jaipur-I [2019 (22) G.S.T.L 278 (Tri.-Del.)] and NMC Industries Private Ltd. Vs. CST Mumbai [2020 (43) G.S.T.L 551 (Tri.-Mumbai)] are apt. In the ST/42273/2014 case of Rajendra Singh supra, it has been held as under: \"7. On perusal of the above definition, it would reveal that construction of roads is excluded from the purview of such taxable service. The definition of taxable service does not specify the type of roads, whether private or public for the purpose of consideration of such exclusion clause. Since the definition is specific to service provided in respect of road only, in our considered view, it cannot be interpreted that only construction of public roads should get the benefit of exclusion provided in such definition clause. In other words, irrespective of the purpose of construction of the road, whether for public utility or for the utility of organization concerned for their use, the benefit of exclusion clause provided in the definition under [Section] 65(25)(b) of the Act should be available, for non- levy of Service Tax. Since there is no ambiguity in plain reading of the definition and in view of the admitted fact that the appellant had constructed roads for different commercial entities/organization, the benefit of the exclusion provided in the definition clause should be available to it. 25 ST/41957/2015 8. Therefore, the impugned order, confirming the Service Tax demand against the appellant will not stand for judicial scrutiny on these grounds. Accordingly, after setting aside the same, we allow the appeal in favour of the appellant.\" 11.8 Following the judicial discipline and the ratio of the above decisions, we are of the view that the demand raised in respect of roads and confirmed against the taxpayer cannot sustain. 12. Next, we come to the issue of levy of Service Tax on industrial constructions like culvert, compound wall, ramp, showroom, railway siding, Lorry parking yard work factory buildings, residential quarters for Industrial workers as shown in the Table below. Sl. No. Recipients of Service 1 a. M/s. Madras Cements Ltd., Alathiyur b. M/s. Madras Cements Ltd., Ariyalur c. M/s. Madras Cements Ltd., R.R. Nagar d. M/s. The Ramaraju Surgical Cotton Mills Ltd, Rajapalayam e. Shri Krishnamoorthi Raja, Mukesh Honda Show Room, Rajapalayam f. M/s. Vishal Industries, SIDCO Industrial Estate, Rajapalayam g. M/s. Sri Vishnu Shankar Mills Limited, Rajapalayam We have examined the above services provided by the Appellant as described in Order-in-Original and from a plain reading of Section 65(105) (zzzza) of the Finance Act, 1994, it is clear all the above services are covered by the definition of service of construction of a new building or a civil 26 ST/41957/2015 structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; Hence, we hold that the construction of buildings for the industrial establishments mentioned supra are chargeable to service tax under “Works Contract Service”, since there is transfer of property in goods involved in the execution of such construction. However, in respect of residential construction for workers, the contract copies / scope of activity have to be examined as to the taxability. 13.1 Next, we come to the taxability of construction of Schools, colleges and Nursing home/hospitals for Trusts/Charities covered under Section 12A/12AA of IT Act 1961. 13.2 We have perused the nature of services provided as described in the impugned order for construction of schools and colleges and hospitals to Trusts and it has been held that the buildings constructed by Appellant are used as class rooms, labs and hospitals which are said to run on commercial basis as the school/college administration charge fees from the students. 13.3 The impugned Order-in-Original accepts that the educational institutions are run by charitable trusts but 27 ST/41957/2015 denies the benefit on the ground that there is no exemption to educational institutions being run commercially. This observation is made without appreciating the fact that the definition of ‘works contract service’ specifically refers to 'primarily for the purpose of commerce or industry' and educational institutions run by Trust/Charities and registered under Section 12A/AA of Income Tax are non-profitable and therefore the service activity has to be treated as non- commercial in nature. 13.4 Here we observe that the leviability of service tax would depend primarily upon whether the building or civil structure is 'used, or to be used' for commerce or industry. Such constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non- commercial in nature. In this case, some service recipients are registered as trusts & charitable organisations under Section 12 A/12AA which are non-profitable in nature. 13.5 The Appellant relied upon CBIC Circular No. 80/10/2004 dt. 17.09.2004 in which it has been clarified that constructions which are for use of organisations or institutions being established solely for educational, religious, 28 ST/41957/2015 charitable, health, sanitation or philanthropic purposes and not for the purposes for profit are not taxable being non- commercial in nature. 13.6 The impugned Order has confirmed the demand on the ground that the commercial nature of the educational institutions who receive the taxable service is determined on the basis of collection of charges for education by whatever name called or whatever reasons attributed to such collection. It is to be noted that mere charging fees does not make entity a commercial one. There is no finding in the order that the surplus amount has not been used for the objective of the Trust/Charitable institution. So long as there is no finding to the effect that the surplus is used for any other purpose other than the objective of the institution or benefiting the individual Trustees, the observation that the institutions are commercial in nature is erroneous. 13.7 To substantiate their contentions, the Appellant has placed reliance on the following decisions of the Tribunal as well as Hon'ble High Court wherein it has been held that construction for institutions solely established for education, charitable purposes are not subject to service tax: The Principal Bench, Delhi Tribunal in Jyoti Sarup Mittal V. CCE [2017 (3) G.S.T.L. 478 (Tri.-Del.)] has held that when 29 ST/41957/2015 construction Services are undertaken for educational institutions, Service tax is not leviable. Further, the Service Tax Circular No.86/4/2006-S.T, (F.No.137/71/2006-CX.4) dated 01.11.2006 has clarified that a “commercial concern” is an institution/establishment that is Primarily engaged in commercial Activities having profit as its Primary aim. It is not one/few isolated Activities which determine Whether or not an institution is a commercial concern but it is the totality of its activity that determines the commercial nature of an institution. When this is read in consonance with the Service Tax Circular dated 10/09/2004, it gives the legal position that Construction of a school or College or an educational institution would fall completely outside the Purview of service tax levy. In the case of M/s. R.R. Thulasi Builders (India) Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Salem, [F.O.No. 41242/2019 dated 31.10.2019] Tribunal Chennai has held that even though the fees was collected by the educational institutions, the demand of service tax under WCS for the disputed period for construction of educational institutions cannot sustain. Applying the ratio of the above said decisions, we find that the issue on merits is answered in favour of the appellant and against the Revenue. 30 ST/41957/2015 14. Next, we dwell on the issue of leviability of service tax on construction services rendered to a Nursing home, Hospital and college for SAPR CONSTRUCTION(P) Ltd, N.A. Manjammal Polytechnic College, Rajapalayam Shri Krishna Hospital, Rajapalayam for organisations though not covered under Trusts/charities and not registered under Section 12A/12AA of IT Act. We find that these organizations are collecting fees and therefore the Adjudicating Authority has held that these services are commercial in nature and so service tax is payable. However, a catena of judgements including discussed supra will clearly indicate that these cannot be subjected to service tax considering the definition of the service. As such, we are of the view that service tax cannot be charged for services rendered to educational institutions and hospitals. 15. Regarding the demand in respect of repair and maintenance of roads, it is exempted from service Tax by Notification No. 24/2009 S.T. for the activity of management, maintenance or repair of roads. Further the said service is undisputedly covered by the retrospective exemption provided by way of Section 97 of the Finance Act, 2012 for period from 16-6-2005 onwards. As demand has been confirmed against this category, we deem it right to hold that the Appellant is eligible for this exemption, and we 31 ST/41957/2015 extend the benefits of the same and the demand on this account needs to be set aside and we do so. 16. Regarding the other services such as cleaning service, manpower supply service, supply of tangible goods service and construction of Kalyana Mandapam weres held as taxable in the impugned order, and the Appellant has also not contested the same. We are in agreement with the reasoning for the demand on such services in the impugned order and uphold the demands confirmed. 17.1 The impugned order makes a mention that the Appellant has raised bills for construction of various works entrusted to him by M/s. Madras Cements Ltd., and in almost all the cases he has charged and collected service tax in the respective bills and held that the Appellant has collected service tax consciously and he was fully aware of the taxability of his services at the time of provision of services and that having retained the service tax so collected, he now wants to escape from the huge tax liability by claiming that most of the services provided by him for M/s Madras Cements Ltd are laying of roads. 17.2 Section 73 A of the Finance Act, 1994 (as amended from 18 April 2006), provides that any person, who 32 ST/41957/2015 is liable to pay service tax and has collected any amount in excess of the service tax assessed, shall forthwith pay the amount so collected to the credit of the Central Government. 17.3 We refer to Para 2.3 of the SCN where there is a mention that the Appellant has collected service Tax of Rs 31,14,588 (Page 42 of Appeal paper book) from Madaras Cements. Section 73A of the Finance Act, 1994, mandates that any service tax collected in excess of the assessed or determined amount must be deposited with the Central Government forthwith. The term \"forthwith\" is interpreted as requiring reasonable promptness. 17.4 Here it is immaterial whether the Tax is payable or not, but once an amount is collected as service Tax from the service recipients, it has to be deposited immediately into the Govt account. In the instant case, the Tax payer has deposited an amount of Rs 12,06,043 belatedly after the investigation and this has resulted in financial accommodation to the Appellant due to his improper conduct/ intent. 17.5 It is aptly observed in the case of CCE & ST, Ludhiana vs. Ajay Kumar Gupta [2014 (9) TMI 649 - CESTAT NEW DELHI], that charging of Service Tax by assessee and 33 ST/41957/2015 retaining the same with him instead of paying the same to revenue is an act of wilful suppression of facts with an intent to evade payment of Service Tax and establishes assessee’s mala fides. 17.6 On perusal of the account statements forming part of this paper book (Pages 137-138), it appears the Appellant is showing service tax as collected from other industrial customers like Vishal Industries, N.R. Krishnamuthi Raja, Vishnu Shankar Mills, and toward construction of Colleges/hospitals/schools etc. This issue needs a thorough verification of actual amount of Service Tax collected and paid as the SCN / Impugned order makes a mention of Tax collected from Madras Cements only. The tax collected as per the SCN is different from the figure admitted by the Appellant. The demand of actual tax so collected is ordered to be deposited to the Revenue along with applicable interest. We order further the Appellant is required to pay equivalent penalty for collecting service tax from its clients and not paying the same to the credit of Government Account. 18.1 Having concluded the issue of taxability of the services provided by the Appellant; we now examine the 34 ST/41957/2015 question of demand of service tax for the extended period under proviso to Sec. 73(1) of F.A 1994. 18.2 The impugned order has held that, “The Appellant has contested the demand of service tax for the larger period on the ground that there is no mens rea in not paying the service tax and the other ingredients such as fraud, willful misstatement suppression of facts and collusion are absent in his case. He has cited various case laws in support of his contention that the larger period cannot be invoked for demand of Service. The argument of SRK does not hold water in as much as he has obtained service tax registration as early as 2001 and further, he has started collecting service tax from his customers from 2009 onwards as per his own submission. To make the matter worse, he has retained the service tax collected from the Customers without depositing the same in to the exchequer thus enrichening himself at the expense of Revenue. In the absence of assessed Tax liability in the ST3 Returns, it is presumed that the non- payment of service Tax was intentional and deliberate and more so, when the service tax has been collected from the recipients of service. Thus, the intention to evade payment of service TAX is explicit in this case. Had the evasion of service not brought to light, through the intelligence and investigation of DGGEI officials. a huge revenue would have been lost and SRK would have gone Scot free. Under the circumstances, it is highly improbable that non- payment of service Tax is due to ignorance and accordingly, invoking of extended period under proviso to Section 73(1) of the Act in the case is justified”. 35 ST/41957/2015 18.3 We are in perfect agreement with the findings of the Learned Adjudicating authority on this score. The provisions of Section 73A and proviso to Section 73(1) of the Act can be simultaneously invoked as Section 73A can be invoked for the reason that the appellant has collected the amounts from the recipients and not paid to the Govt. and further proviso to section 73(1) can be invoked for the reason that they neither filed any returns nor paid applicable Service tax for these years. 19. Facts indicate that the Appellant has not co- operated with the investigation in giving all the details of the services rendered. Details of services availed, and consideration paid to the Appellant have been obtained from the service recipients by strenuous efforts. All these clearly establish the improper conduct and not so bona fide intention of the appellant and mere act of taking registration and filing isolated returns for few months prior to the demand period cannot act as any mitigating factor or provide a shield against invocation of the extended period in terms of proviso to Section 73(1) of the Finance Act, 1994. The Appellant have neither filed returns nor paid Service tax for over five years, except for few months before the demand period. The Appellant has also not pleaded any other extenuating circumstances. The facts of the case clearly establish that 36 ST/41957/2015 the Appellant has deliberately evaded payment of Service tax during the period covered by the impugned order though they have collected the same in some cases from the recipients of services, and therefore, the extended period has been rightly invoked against the Appellant in demanding the same and the case Laws cited by the Appellant will not offer any relief , as it is a case of outright evasion of Tax and malafide intention has been established in collecting the service tax from their customers but not depositing to the Government Account. 20. In view of the above detailed discussion, we deem it proper to remand the appeal for denova adjudication with the following observations and directions: - i. Construction of roads whether for public or private use is exempted from payment of service tax. ii. Likewise, service tax exemption is eligible for maintenance and repair of goods (refer to para 15 supra). iii. Exemption from payment of service tax claimed for construction services provided to schools, colleges and other educational institutions is allowed whether the trusts and charities are registered or not under Section 12A / 12AA of the Income Tax Act, 1961. 37 ST/41957/2015 iv. The tax liability on works contract and other services provided is required to be worked out and demanded along with interest in the light of discussion and findings supra. v. The issue of penalty will be decided on the basis of quantum of service tax evaded. 21. We have to observe that the Appellant is claiming exemption under the heading of construction of roads or their repair and maintenance in respect of various services rendered i.e., construction of retaining wall and ramp in the mines, supply and filling of red soil for lorry yard, construction of pipe culvert at mines, construction of compound wall, lorry parking yard work, etc., which is required to be examined in detail on going through the scope and activity of the services rendered. 22. With the aforesaid directions, the appeal is remanded for fresh adjudication by the Commissioner of Central Excise, Tirunelveli to complete the mathematical exercise and verification within three months of receipt of this order and after strict compliance to the principles of natural justice. 38 ST/41957/2015 25. Thus, the appeal is allowed by way of remand on the above terms. (Order pronounced in open court on 07.08.2025) Sd/- Sd/- (AJAYAN T.V.) (VASA SESHAGIRI RAO) MEMBER (JUDICIAL) MEMBER (TECHNICAL) MK "