2011 (7) TMI 190 - AT - Service Tax

Demand of duty and penalty - Commercial or Industrial Construction Services - Appellants submitted that the painting job being provided by them to their customers is only in respect of old plants and machinery and other equipments etc - The said plea of the appellants was not accepted by the Commissioner (Appeal) on the ground that the same requires examination and verification of the contracts entered into by the appellant with their clients and inasmuch as the such contracts were not placed before the original adjudicating authority the same cannot be accepted by him as it amounts to placing of additional evidence on record - The appellant s second plea that in any case the work undertaken by them would be covered by the Works Contract Services which were made liable to tax with effect from 01.06.2007 he rejected the said plea again on the same ground that the same is related to factual aspects and examination of records which were not placed before lower authorities - Accordingly set-aside the impugned order and remand the matter to original adjudicating authority for deciding both the above issues after examining the records - Appeals are thus allowed by way of remand.

Summary

Issues:
1. Confirmation of demand of duty and penalties in service tax cases.
2. Classification of painting job under Commercial or Industrial Construction Services.
3. Legal stand taken by the appellants regarding the nature of painting job.
4. Applicability of Works Contract Services post 01.06.2007.
5. Consideration of legal pleas and remand of the matter for further examination.

Analysis:
1. The judgment addresses the confirmation of demand of duty and penalties in service tax cases where the appellants had already deposited a partial amount. The Tribunal dispensed with the condition of pre-deposit for the balance amount and penalties. The service tax was confirmed against the appellants for providing painting services classified under Commercial or Industrial Construction Services for the period from October 2005 to March 2007.

2. The issue of classification of the painting job under Commercial or Industrial Construction Services was examined based on clause 25(b) of Section 65 of the Finance Act, 1994. The Revenue viewed the painting services provided by the appellants to their clients as falling under this category, leading to the confirmation of service tax and imposition of penalties.

3. The appellants argued before the Commissioner (Appeal) that the painting job was solely for old plants and machinery, not falling under Commercial or Industrial Construction Services. However, this argument was not accepted due to the lack of contract verification. Another plea regarding Works Contract Services post 01.06.2007 was also rejected for similar reasons.

4. The legal representative contended that the pleas raised were legal in nature and highlighted the registration under Works Contract Services post 01.06.2007. The Tribunal acknowledged these as legal issues requiring verification of contracts to some extent. They set aside the impugned order and remanded the matter for further examination by the original adjudicating authority, considering the legal aspects and the order related to the appellants' sister concern.

5. The judgment emphasized the consideration of legal pleas and the need for verification of contracts while addressing the classification and liability under Works Contract Services. The Tribunal allowed the appeals by way of remand, directing a detailed examination by the original adjudicating authority, taking into account both legal and factual aspects, including the registration under Works Contract Services post 01.06.2007.