Service Tax Leviable On RIICO And RASMB For Commercial And Industrial Construction Services: CESTAT
Mehak Dhiman
25 March 2025 9:20 AM
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that there is a service tax liability on RIICO and RASMB for commercial and industrial construction services. The Bench of Dr. Rachna Gupta (Judicial) and Hemambika R. Priya (Technical) was addressing the issue of the tax liability of the service provider providing “Commercial...
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that there is a service tax liability on RIICO and RASMB for commercial and industrial construction services.
The Bench of Dr. Rachna Gupta (Judicial) and Hemambika R. Priya (Technical) was addressing the issue of the tax liability of the service provider providing “Commercial and Industrial Construction Service” to the public authorities.
In this case, the assessee/appellant had entered into an agreement with Rajasthan State Agriculture Marketing Board, (RSAMB) Jaipur, Rajasthan State Industrial Development and Investment Corporation Ltd. (RICCO), Jaipur Development Authority (JDA).
The department observed that in respect of Commercial and Industrial Construction Services provided, the assessee appears to have not paid the service tax.
A show cause notice was issued to the assessee. The Adjudicating Authority confirmed the order. Aggrieved by the decision of Adjudicating Authority, the assessee filed an Appeal before Commissioner (Appeals), who upheld the order of the Adjudicating Authority. The assessee has challenged the order passed by the Commissioner (Appeals) before the Tribunal.
The department submitted that RSAMB and RIICO are purely the commercial organizations. Hence, there arises service tax liability on the service providers for providing any service to such commercial organizations irrespective of these organizations being the governmental/ local authorities. The private parties have commercial concerns; hence, no exemption flows towards any service being provided to the private authorities.
The Tribunal stated that the functions of RIICO and RASMB are held to be discretionary functions for commercial purposes.
The Tribunal opined that “the functions of RIICO and RASMB are held to be discretionary functions for commercial purposes. Hence irrespective the roads or compound wall have been constructed for these local authorities, the assessee is liable to pay service tax while providing the said services. There is no exemption available to the appellant while providing such services to any private entity whose interest is nothing except commercial.”
In view of the above, the Tribunal dismissed the appeal.
Counsel for Respondent/ Department: Aejaz Ahmed
Case Title: M/s. Gokulnath Construction Company v. Commissioner of Central Excise & Central GST, Jaipur
Case Number: Service Tax Appeal No. 53032 OF 2018