2011 (9) TMI 417 - AT - Service Tax

Civil construction work undertaken required for pre-commissioning of petrol pump invoking the longer period of limitation - Held that - The definition of commissioning and installation takes into ambit the services provided in relation to commissioning or installation of plant and machinery or equipment and not completing the job for pre-commissioning. Thus , civil construction work performed does not fall under the category of commissioning and installation. Since there is no evidence of positive act of suppression against the appellants. It is well settled law that mere non-filing of information to the Revenue on the reasonable belief that the activities undertaken by them are not taxable, cannot be held to be a justifiable ground for invokation of longer period of limitation.- Decided in favor of assessee.

Summary

Issues:
1. Confirmation of service tax demand against the appellant for commissioning and installation services provided during the construction of a petrol pump.
2. Imposition of penalties under various Sections of the Finance Act 1994 on the appellants.
3. Invocation of the longer period of limitation for raising service tax demands against the appellant.

Analysis:
1. The judgment revolves around the confirmation of a service tax demand of Rs.2,71,103/- against the appellant for allegedly providing commissioning and installation services while constructing a petrol pump for Reliance Engineering Associates Pvt. Ltd. The appellants argued that they only undertook civil construction work and did not commission or install any plant, machinery, or equipment. The Bench noted that the work undertaken by the appellant involved civil construction activities such as masonry, sanitary work, road paving, and electrical work. The adjudicating authority observed that the appellant had undertaken work necessary for pre-commissioning of the petrol pump, but it was not equivalent to commissioning and installation services as defined under section 65(28) of the Finance Act, 1994. Therefore, the confirmation of service tax against the appellant was deemed unjustified.

2. In addition to the service tax demand, penalties under various Sections of the Finance Act 1994 were imposed on the appellants. However, the judgment primarily focused on the issue of service tax demand and the applicability of commissioning and installation services, ultimately leading to the decision to set aside the impugned order and grant relief to the appellant.

3. The judgment also addressed the invocation of the longer period of limitation for raising service tax demands against the appellant. The lower authorities justified the extended period of limitation by citing the appellant's failure to inform the revenue about the services provided to Reliance Engineering Associates, which came to light during an audit. The Bench, however, held that mere non-disclosure of information, based on a reasonable belief that the activities were not taxable, did not constitute a valid ground for invoking the longer period of limitation. The absence of any positive act of suppression or intentional misstatement led the Bench to conclude that the demand beyond the normal period of limitation was not sustainable, resulting in the appeal being allowed in favor of the appellant.

In conclusion, the judgment analyzed and resolved the issues related to service tax demand, penalties, and the invocation of the longer period of limitation, ultimately providing relief to the appellant based on the interpretation of relevant legal provisions and factual circumstances presented during the proceedings.