2016 (4) TMI 1171 - AT - Service Tax

Renovation services - completion or finishing services falling under commercial or industrial construction services - Abatement - N/N. 15/2004-S.T., dated 10-9-2004 and N/N. 1/2006-S.T., dated 1-3-2006 - Held that - It is well settled law that the law declared by the highest court of the country has to be interpreted in such a manner as if the same was the law, even prior to declaration of the same by Hon ble Supreme Court. As such, we find favour with the appellant s stand that whatever duty stands paid by them was also wrongly paid as there was no tax liability on their part in view of the recent decision of the Hon ble Supreme Court - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of services for service tax liability, Abatement claimed by the appellant, Interpretation of Supreme Court judgment on works contract taxation prior to 1-6-2007.

Analysis:
The appellant, engaged in renovation services, faced a dispute with the Revenue over the classification of services for service tax liability. The Revenue categorized the services under completion or finishing services falling under commercial or industrial construction services. The appellant claimed abatement under Notification No. 15/2004-S.T. and No. 1/2006-S.T. The Revenue initiated proceedings resulting in a demand of approximately ?3.86 crores, interest, and penalties.

The appellant argued that the service was provided under a works contract, citing the Hon'ble Supreme Court's decision in CCE & CUS., Kerala v. Larsen & Toubro Ltd., stating no tax liability existed for works contracts before 1-6-2007. The appellant contended that the confirmation of differential demand was irrelevant due to this judgment.

The Revenue contended that the proceedings were based on the abatement claim and rejected the appellant's argument regarding the Supreme Court judgment.

The Tribunal disagreed with the Revenue's contention, noting that the services were provided under works contract orders. Referring to the Supreme Court's decision, the Tribunal held that works contracts were not taxable before 1-6-2007. The Tribunal emphasized that the law declared by the Supreme Court must be interpreted as if it was the law even before the judgment. The Tribunal accepted the appellant's position that the duty paid was not required, given the Supreme Court's ruling. However, the appellant acknowledged the payments made and did not dispute them.

Consequently, the Tribunal found the order confirming the differential duty and imposing penalties unsustainable. The order was set aside, and the appeal was allowed with consequential relief.