2015 (12) TMI 1566 - AT - Service Tax

Service tax liability - supply and installation of Metal Crash Barriers along the side of highways - Held that - regarding the nature of service rendered by the appellant it is clear from the work order as well as the observations of the lower authorities that these are composite work involving supply of materials and provision of service. These are rightly to be categorized under works contract and the Hon ble Supreme Court in the case of CCE Kerala v. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT held that prior to 1-6-2007 there is no charging section for levying service tax on works contract. It is also found that the classification followed by the lower authorities is not sustainable. From the nature of work and the material involved it is clear that supplying and fixing Metal Crash Barriers along the highways cannot be considered as erection and commissioning of any plant and machinery or similar equipments. The Metal Crash Barriers are essentially part and parcel of highways and appellant s plea that the exemption available to the construction of road will cover these structures also has much force. The Manual of Specifications and Standards for National Highways issued by Government of India Ministry of Shipping Road Transport & Highways mentions Metal Beam Crash Barriers as one of the manufactured materials for use in the highways. Therefore the impugned order is not sustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Classification of services rendered by the appellant for supply and installation of Metal Crash Barriers.
2. Applicability of service tax on the work executed by the appellant.
3. Exemption of Metal Crash Barriers installation from service tax under works contract or highway construction.

Issue 1: Classification of services rendered by the appellant for supply and installation of Metal Crash Barriers

The appellant contended that the work involved a composite work contract with the supply of materials and services, falling under works contract not liable to service tax before 1-6-2007, citing the Supreme Court's decision in CCE, Kerala v. Larsen & Toubro Ltd. The appellant argued that the lower authorities' classification as erection, commissioning, or installation services was legally unsustainable, emphasizing that the work was civil in nature with Metal Barriers fixed on concrete foundations along highways.

Issue 2: Applicability of service tax on the work executed by the appellant

The authorized representative argued that the appellant failed to pay excise duty on the full value of Metal Crash Barriers, leading to the demand for service tax on the work performed. The representative maintained that the work could be classified as erection, commissioning, and installation services since Metal Crash Barriers could be considered equipment and structures.

Issue 3: Exemption of Metal Crash Barriers installation from service tax under works contract or highway construction

Upon reviewing the submissions and records, the Tribunal found that the appellant's services involved composite work with material supply and service provision, aligning with works contract classification. Citing the Supreme Court's decision, the Tribunal ruled that pre-1-6-2007, there was no provision for levying service tax on works contracts, favoring the appellant's case. The Tribunal also determined that Metal Crash Barriers were integral to highways, supporting the appellant's claim that these structures fell under the road construction exemption, as per the Manual of Specifications and Standards for National Highways.

In conclusion, the Tribunal held that the impugned order was unsustainable and allowed the appeal in favor of the appellant, providing consequential relief.