P. G. Chacko, Judicial Member - This application filed by the appellant seeks waiver and stay in respect of the adjudged dues which include demand of service tax of Rs.5,19,33,770/- (education cess include) under the head "Commercial or Industrial Construction service" for the period from 1.1.2006 to 31.3.2008 and also penalties imposed on the appellant under various provisions of the Finance Act, 1994. On a perusal of the records, we note that a part of the service tax demand is in respect of "Construction of Residential Building Complexes" for the Indian Navy and the same amounts to a little over Rs. 2.46 Crores. The rest of the demand of the service tax is in respect of similar works executed by the appellant for private clients and the same is to the tune of Rs. 2.73 Crores. After hearing both sides, we find that the learned consultant for the appellant claims total exemption from demand of service tax in respect of the works executes for the Indian Navy. In this connection, he has relied on Khurana Engg. Ltd. v. CCE [Final order No. A/1882 of 2010 - W2B/AHD, dated 26-11-2010] and Sima Engg. Constructions v. CCE [2012] (Chennai-CESTAT). In both the cited cases, Coordinate Benches of the Tribunal held to the effect that ‘construction of residential complexes’ for government for residence of employees was not exigible to service tax under the aforesaid head inasmuch as such works did not involve any commercial or industrial use. The learned consultant also has relied on an internal communication b/w the Financial Ministry (TRU) and the Ministry of Defence, wherein it was clarified that, generally, government buildings were not used for commercial activities and, therefore, construction of such buildings would not be taxable. We heard the learned Addl. Commissioner (AR) also on the above issue. After considering the submissions, we have not found prima facie case for the demand of service tax raised in respect of the construction made for the Indian Navy.

2. As regards the demand raised in respect of ‘construction of building complexes’ for private clients, the learned consultant submits that these works were undertaken under ‘Works contract Agreement’ and that, for the period from 1.6.2007, the activity may be taxable under ‘Works Contract Service’ and consequently, the demand raised under ‘commercial or industrial construction service’ is not sustainable for the prior period it is further pointed out in this context that, if the cost of materials which were supplied free is to be included in the gross taxable value, the total additional tax liability will be around Rs.40.9 lakhs only. The learned consultant further submits that the appellant is entitled to 67% abatement under the relevant Notification and that this relief was not given by the adjudicating authority. It is further claimed that an amount of Rs. 81.67 lakhs was paid by the appellant as per the relevant Returns. The learned consultant has also pleaded financial hardships, but this plea is not supported by any evidence. It has also been submitted that the appellant paid VAT on the material cost in respect of the works undertaken for private clients. We have also heard the learned Addl. Commissioner (AR) on the issue.

3. We have not found any evidence of payment of Rs. 81.67 lakhs by the appellant and, hence, this claim cannot be considered for the present. We further note that the demand raised by the learned Commissioner is after taking into account the payments as per Returns. Reverting to the merits of the submissions, we find that no copy of any agreement has been placed on record and hence, we have not been able to ascertain whether the works undertaken by the appellant for private clients would constitute ‘works contract’ as claimed by the learned consultant. On a perusal of the work orders and connected invoices, prima facie, it appears that the appellant was undertaking ‘commercial or industrial construction’ for their private clients. As rightly po