Services Provided With Respect To A Government Sports Stadium, Not A Commercial Service; Would Not Attract Service Tax: CESTAT Delhi

The Bench, consisting of Justice Dilip Gupta (President) and Mr. Raju (Technical Member), held that the activity of laying Synthetic Athletic Track Surface is of a civil nature and therefore, it would fall within the definition of commercial or industrial construction services; however, since the same was provided in respect of a sport facilities owned by the Government, the same would not be chargeable to service tax.

The appellant M/s Shiv Naresh Sports Pvt. Ltd. rendered the service of development of sports facilities and associated infrastructure, along with providing and laying of the Synthetic Athletic Track in respect of the sports organizations of the Central and the State Government. The appellant paid service tax in the category of erection, commissioning and installation services. The appellant applied for refund of the service tax on the ground that no service tax was payable by it, which was rejected by the revenue authorities. Against this, the appellant filed an appeal before the CESTAT.

The appellant M/s Shiv Naresh Sports Pvt. Ltd. contended before the CESTAT that services of development of sports facilities and associated infrastructure, which was provided by the appellant, would fall under the description of commercial or industrial construction services. However, the appellant averred that no service tax was payable by it since the said structures for which the services were provided were not of a commercial nature.

The appellant averred that 'Commercial or Industrial Construction' services, as defined in Section 65 (25b) of the Finance Act, 1994, includes in its definition not only repair, alternation, renovation or restoration but also includes similar services in relation to a building or a civil structure. The appellant contended that since the stadium or the Synthetic Athletic Track was not used for commercial purposes, the same would not fall under the category of 'Commercial or Industrial Construction' services.

The appellant submitted that the services provided by it was covered by the description of 'Commercial and Industrial Construction' services. However, the appellant argued that since the said services were provided to Government facilities, which are not of a commercial nature, the same would not fall under the category of 'Commercial or Industrial Construction' services, as defined in Section 65 (25b).

Thus, the appellant contended that no service tax could be levied under the category of commercial or construction service.

The revenue department submitted that the appellant had classified the services rendered by it as erection, commissioning, and installation services. The revenue department averred that there is no exemption from service tax on services in relation to non-commercial structures in case of erection, commissioning and installation services. The revenue department added that the refund claim of the appellant was hit by the clause of unjust enrichment as well as on account of limitation.

The CESTAT noted that the services provided by the appellant included providing and fixing of seating arrangement in a stadium, as well as providing and laying of Synthetic Athletic Track Surface in a sports facility.

The CESTAT observed that the appellant sought to classify the services provided by it in the service description of 'Commercial and Industrial Construction' services, as defined in Section 65 (25b) of the Finance Act, 1994.

The CESTAT held that in view of the definition of 'Commercial and Industrial Construction' services, the activity of fixing chairs in a commercial establishment would be covered under the description of commercial or industrial construction services.

However, the CESTAT observed that the Mumbai Bench of CESTAT in the case of B.G. Shirke Construction Technology Pvt. Ltd. versus Commissioner of Central Excise (2013) had held that services provided for the sports facilities owned by State would not be chargeable to tax under commercial or industrial construction services. The CESTAT Mumbai had held that the Sports Stadiums were deemed to be public utilities and that they are used for public purposes. The CESTAT had ruled that merely because some amount was charged for using the said facility, it did not become a commercial or industrial construction. Thus, the CESTAT had held that the Sports Stadium constructed for conducting Commonwealth Games was a non-commercial construction.

Therefore, the CESTAT ruled that the activity undertaken in a stadium, which belongs to the Government and which is used for non-commercial activities, would not be covered under the definition of commercial or industrial construction services.

Hence, the CESTAT held that though the activity of fixing chairs in a stadium would be covered under the description of commercial or industrial construction service, however, it would not be chargeable to tax for the reason that the structure for which the said activity had been undertaken was not of a commercial nature.

Additionally, the CESTAT ruled that the activity of laying of Synthetic Athletic Track Surface is of a civil nature, therefore, it would be covered by the activities described in the definition of commercial or industrial construction services. However, the CESTAT held that since the same was provided in respect of a sport facilities owned by the Central or the State Government, the same would not be chargeable to tax.

Thus, the CESTAT held that the services provided by the appellant were not taxable.

The CESTAT added that the order passed by the revenue authorities, which is sought to be challenged by the appellant, does not contain any findings on the issue of limitation or unjust enrichment. Since the said issue had not been examined by the lower authorities, the CESTAT remanded the matter back to original Adjudicating Authority for a decision on the said issue.

Thus, the CESTAT partly allowed the appeal.

Case Title: M/s Shiv Naresh Sports Pvt. Ltd. versus Commissioner, Service Tax, Delhi

Dated: 13.06.2022 (CESTAT Delhi)

Representative for the Appellant: Mr. R.K. Philips, Advocate

Representative for the Respondent: Dr. Radhe Tallo, Authorized Representative for the Department

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