2026-VIL-1406-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Classification of work undertaken in commercial showroom fitment - Determination of abatement under Rule 2A of Service Tax Valuation Rules 2006 - Appellant, engaged in interior decoration and designing, received newly constructed commercial buildings with roof and floor and converted them into modern commercial showrooms involving making usable floors and ceiling, internal walls, HVAC, fire suppression, plumbing and other fit-outs, paying VAT on eighty percent of the work contract value as goods - Whether work undertaken by the appellant constitutes original work attracting sixty percent abatement under Rule 2A(ii)(A) or completion and finishing services attracting thirty percent abatement under Rule 2A(ii)(B) of Service Tax Valuation Rules 2006 and whether taxable service was provided by appellant in receiving forfeiture of advance and reimbursement for goods destroyed in fire - HELD - The work undertaken by the appellant which involved converting bare skeletal structures of buildings into complete showrooms including electricity, HVAC, plumbing, flooring, ceiling, air-conditioning and partitioning constitutes original work and not merely completion or finishing work. As the appellant had discharged VAT on eighty percent of the value considering the work as original work, the appellant has rightly paid service tax under Rule 2A(ii)(A) on notional basis by claiming abatement of sixty percent of the value of works contract. No demand is sustainable on this count - The forfeiture of advance paid by customer for purchase of goods which customer abandoned cannot be termed as any service provided by appellant. No service tax is payable on forfeiture of advance. The reimbursement received by appellant from commercial entity for loss of goods due to fire outbreak in showroom is against loss incurred by appellant and cannot be termed as service provided by appellant. No service tax is payable on said reimbursement. No demand is sustainable against the appellant and no penalty can be imposed - The impugned order is set aside and the appeal is allowed
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