2025-VIL-1222-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Meaning of “Original Works” - Construction Contract, Original Works or Completion and Finishing Work, Abatement benefit – Rendering of Construction services involving earthwork, waterproofing, carpentry, plumbing, sanitary installations, installation of lifts, LPG line, telephone lines, painting, etc. for a new project - Short payment of service tax on the basis that the work was in the nature of "finishing work" and not "original works" - Department contended that the appellant was liable to pay service tax by taking the taxable value at 70% of the gross amount charged, instead of 40% as claimed by the appellant - Whether the work orders executed by the appellant were in the nature of "Original Works" or "Completion and Finishing Service” – HELD - The nature of work in the present case involves not merely cosmetic finishing work but also includes extensive work in terms of making the building habitable. In todays’ modern concepts, construction cannot be restricted to merely the brick work or the basic structure of a building. Any building whether residential/non-residential is made useable only after the activities, like in the present case are carried out and which may be termed as miscellaneous civil construction - The project on which the appellant carried out those miscellaneous activities are new construction and were completed by the appellant by carrying out the remaining activities. The concept of construction necessarily has an inbuilt part of finishing to make the building/tower/complex habitable and workable - the work sub-contracted to the appellant was part of the main contract, which is an original work. The “Work Contract Services” provided by the appellant would fall under the purview of the definition of “Original Works” under Explanation-I to Rule 2A of the Valuation Rules and the appellant are entitled to abatement of 60% and liable to pay service tax on 40% of the total amount charged for the work done - Since the main demand on this account is set aside, the interest and penalty is consequently quashed, however, the interest amount levied on short payment of service tax is maintained - The appeal is partly allowed
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