2012 (7) TMI 633 - AT - Service Tax

Demand of Service tax, interest and penalty site survey, designing, foundation, fabrication of steel structures, transportation, assembly and erection of structures on the foundation, roofing, installation of lighting, false ceiling, painting etc. - whether their activity was Commercial or Industrial construction service taxable w.e.f. 10/9/04 or the same was erection, installation and commissioning service (erection of structures) which became taxable only from May 2006 Held that - plea of the appellant which has a bearing on the quantum of duty demand is that during period w.e.f. 1/5/06 they were paying service tax as the gross amount received by them after availing abatement, not just on the job charges. This plea of the appellant has not been considered by the Commissioner - matter remanded to the Commissioner for denovo adjudication

Summary

Issues involved:
Interpretation of whether the appellant's activity falls under 'Commercial or Industrial construction service' or 'erection, installation and commissioning' service for service tax liability. Determination of the taxability period and calculation method for service tax. Assessment of time limitation for duty demand and imposition of penalty.

Detailed Analysis:

Issue 1: Taxability Classification
The appellant's activity involves supplying and installing duty paid structural steel canopies at retail outlets. The dispute centers on whether this activity qualifies as 'Commercial or Industrial construction service' taxable since 10/9/04 or as 'erection, installation, and commissioning' service taxable from May 2006. The appellant argued that their activity should be taxed from 1/5/06 under the latter category, emphasizing their payment of service tax based on labor charges. However, the Department viewed the activity as 'commercial or industrial construction service' from 10/9/04. The Tribunal determined that the appellant's work constituted construction of a civil structure for commercial use, falling under 'commercial or industrial construction service' taxable from 10/9/04.

Issue 2: Tax Calculation and Period
The appellant's payment of service tax on the entire value received after availing abatement was not considered by the Commissioner. The Tribunal highlighted the need for a reassessment on this point for the periods in question. From 10/9/04 to 30/5/07, service tax should be levied on the gross amount received minus 67% abatement. From 1/6/07, if the activity falls under 'work contract,' service tax should be calculated based on the taxable value determined under specific rules or at a compounded rate under Works Contract Rules.

Issue 3: Time Limitation and Penalty
The Tribunal examined the appellant's conduct regarding disclosure of their activity to the Department. The Commissioner's order lacked a discussion on whether the appellant's behavior constituted willful misdeclaration or suppression of facts justifying the extended limitation period for duty demand. Citing precedents, the Tribunal emphasized the necessity for a reassessment by the Commissioner on the limitation issue. If the longer limitation period is not applicable, there would be no grounds for imposing a penalty under Section 78.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the Commissioner for a fresh adjudication based on the directions provided in the order. The reassessment should consider the tax classification, calculation method, time limitation, and penalty imposition criteria as discussed during the proceedings.