2011 (1) TMI 710 - AT - Service Tax

Commercial or Industrial Construction Service and Construction of Complex Service - Notification No. 15/2004-ST dated 10.9.2004 and Notification No. 18/2005 dated 7.6.2005 - The issue involved is regarding the eligibility to claim 67% of abatement on the gross amount charged, by the appellant, from their clients for executing few contracts - even if the value of the goods like cement and steel is to be included in the gross value, the Revenue could do so and allow the abatement of 67% on such value to the assessee - Since this argument was not advanced before the adjudicating authority, we are of the view that in the interest of justice, it is fit to set aside the impugned order, keeping all the issue open, and remand the matter back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice - Appeal is allowed by way of remand to adjudicating authority

Summary

Issues:
1. Eligibility for abatement on gross amount charged for construction services.
2. Interpretation of relevant notifications for service tax liability.
3. Consideration of value of goods supplied by clients in determining taxable value.
4. Applicability of 'works contract service' classification.
5. Failure to raise certain arguments before lower authorities.

Analysis:
The appeal challenged an Order-in-Original regarding service tax liability for 'Commercial or Industrial Construction Service' and 'Construction of Complex Service'. The appellant claimed abatement under Notifications 15/2004 and 18/2005, citing free supply of steel and cement. The lower authorities rejected the abatement claim, demanding service tax on total receipts. The appellant argued for abatement based on previous decisions and registration under Kerala Sales Tax and VAT. The issue revolved around whether the value of goods supplied should be included in the taxable amount for abatement eligibility.

The Tribunal considered the notifications granting abatement and noted that the gross amount charged should include the value of goods supplied for construction services. Despite the appellant's plea, the adjudicating authority did not properly address this aspect. The Tribunal acknowledged the 'works contract service' argument raised for the first time, supported by the appellant's registration under state tax laws. As this argument was not presented earlier, the Tribunal set aside the order, remanding the matter for fresh consideration by the adjudicating authority, emphasizing adherence to principles of natural justice.

In conclusion, the Tribunal allowed the appeal by remanding the case for reconsideration, highlighting the need to address the abatement claim and 'works contract service' classification based on the value of goods supplied and the appellant's state tax registrations. The decision aimed to ensure a fair review of the issues involved, emphasizing the importance of procedural fairness and proper legal interpretation in determining the service tax liability for construction services.