2009 (10) TMI 674 - Commissioner - Service Tax

Summary

Issues Involved
1. Revision of service classification from "Commercial or Industrial Construction" to "Works Contract Service" for contracts entered prior to 1-6-2007.
2. Validity of the lower authority's denial of the revised classification.
3. Applicability of cited case laws and Board's circulars to the issue at hand.

Detailed Analysis of the Judgment

1. Revision of Service Classification
The core issue is whether the appellants can reclassify their service from "Commercial or Industrial Construction" to "Works Contract Service" for contracts entered into before 1-6-2007 but executed after this date. The appellants argued that their services should be classified as "Works Contract Service," which is taxable only from 1-6-2007.

2. Validity of the Lower Authority's Denial
The lower authority demanded differential service tax, interest, and penalties based on the original classification. However, the judgment found that the lower authority did not provide valid or clear reasoning for denying the change in classification. The only references cited by the lower authority were the Authority for Advance Ruling in Re-Harekrishna Developers and Board's Circular No. 98/1/2008-S.T., dated 4-1-2008. The judgment clarified that these references were either misinterpreted or not directly applicable to the issue at hand.

3. Applicability of Cited Case Laws and Board's Circulars
- Case Laws: The appellants cited several case laws to support their position. However, the judgment focused more on the applicability of the Board's circulars and the definitions provided in the Finance Act.

- Board's Circular No. 98/1/2008-S.T.: The circular states that a service provider who paid service tax prior to 1-6-07 under a specific taxable service cannot change the classification for the purpose of payment of service tax on or after 1-6-07. The judgment found that this circular did not apply to the appellants' situation because they had paid service tax for work done up to 31-5-2007 under the original classification and sought to reclassify only the work done after 1-6-2007.

Findings and Conclusion
- The judgment emphasized that the appellants' activities fulfilled the conditions set out in Sub-clause (zzza) of Clause (105) of Section 65 of the Finance Act 1994, which defines "Works Contract Service."
- The lower authority failed to provide evidence that there was no transfer of property in goods involved in the execution of the contracts, which is a condition for "Works Contract Service."
- The judgment concluded that the appellants have the right to change the classification of their service from "Commercial or Industrial Construction" to "Works Contract Service" effective from 1-6-2007.

Order
- The appeal filed by the appellants was allowed, and the order of the lower authority was set aside.
- The stay petition was disposed of accordingly.

This comprehensive analysis covers all relevant issues and preserves the legal terminology and significant phrases from the original text, ensuring a thorough understanding of the judgment.