Benefit of Abatement is available in respect of Interior Works on existing buildings

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 © of the said Sec­tion 65 (25b) of the Finance Act, 1994 as claimed by the Revenue.

Clause © and (d) of Sec­tion 65(25b) is repro­duced below:-

Com­mer­cial or Indus­tri­al Con­struc­tion” means:

© 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-

  1. used, or to be used, pri­mar­i­ly for; or
  2. 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 © and, there­fore, the Appel­lant is eli­gi­ble for the ben­e­fit of Noti­fi­ca­tion No. 1/2006-ST and to attract clause © 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’.

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