Commissioner Central GST And Cx Agra vs. M/S Ganpati Mega Builders LTD.

Held

The Court held that the Rajya Krishi Utpadan Mandi Samiti falls within the definition of "governmental authority" under Clause 2(s) of the exemption notification. The Court found that the Mandi Samiti's functions, as per the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, are not commercial or business-oriented, but rather directed towards regulating the sale and purchase of agricultural produce and providing amenities in market yards. The Court interpreted "Post-harvest storage infrastructure for agricultural produce" broadly, stating that "infrastructure" includes the underlying framework of a system, encompassing supporting services like roads and toilets, in addition to sheds and storage facilities. Therefore, construction activities necessary for providing such infrastructure are covered by Clause 14(d) of the notification. The Court also referenced the Apex Court's decision in Krishi Upaj Mandi Samiti vs Commissioner of C.Ex. & S.T., Alwar, which supports the non-commercial nature of Mandi Samiti activities. Consequently, the Court found no infirmity in the CESTAT's order.

Facts

The Commissioner of Central GST and CX Agra (appellant) filed an appeal against an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The respondent, M/s Ganpati Mega Builders Ltd., provided construction and work contract services to the Rajya Krishi Utpadan Mandi Parishad. The dispute concerned the demand of service tax for the financial year 2015-16, specifically regarding services like construction of toilets, roads, sanitation, water reservoir, and drinking water supply. The Joint Commissioner had levied service tax and penalty, holding that the Mandi Parishad's activities were commercial and the respondent was not entitled to exemption under Mega Exemption Notification no. 25/2012-ST dated 20.06.2012. The CESTAT had allowed the respondent's appeal, holding that the construction activities were covered by Clause 14(d) of the said notification.

Key Issues

1. Whether construction services provided to the Rajya Krishi Utpadan Mandi Parishad, including roads and toilets, are eligible for exemption under Clause 14(d) of Mega Exemption Notification no. 25/2012-ST dated 20.06.2012, which pertains to "Post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes"? Petitioner's arguments: The appellant revenue contended that the exemption under Clause 14(d) was limited to services for providing post-harvest storage infrastructure, and constructions like roads and other works did not fall within this scope. Respondent's arguments: The respondent argued that "Post-harvest infrastructures" should be interpreted purposively and broadly, including all constructions necessary for the effective utilization of storage areas. They asserted that roads, toilets, etc., are integral to the "infrastructure" for post-harvest storage. They also argued that the Mandi Parishad's activities are not commercial in nature.