2014 (1) TMI 262 - AT - Service Tax

Classification of service - Service of ACP cladding and coil cutting - Business Auxiliary Service - Held that - Where a facially taxable service is classifiable under more than one taxable service and Revenue assumes that the service provided falls into one taxable service, (namely BAS in the present case), and the assessee asserts that the service falls generically within another taxable service (CICS), it becomes the non-derogable obligation of the adjudicating authority to deal with the dispute as to classification and he must record a finding that the service provided falls within a specified taxable service; and for reasons recorded for such conclusion. This is a fundamental obligation of the authority, having regard to the fact that there is facially an overlapping between several taxable services enumerated in Section 65 of the Act - The order of the adjudicating authority clearly fails to deliver upon this obligation, of resolution of a dispute as to classification. Even the show cause notice dated 16.11.2010 does not specify the particulars of the service allegedly provided by the appellant, in relation to ACP cladding work executed in favour of the recipient and thus fails to provide adequate notice to the appellant - Decided in favour of assessee.

Summary

Issues:
Classification of services provided by the appellant under 'Business Auxiliary Service' (BAS) or 'Commercial or Industrial Construction Service' (CICS).

Analysis:
The appellant, registered under 'Transport of goods by road service' and 'Business Auxiliary Service' (BAS), was alleged to have provided ACP cladding and coil cutting services during 2007-08 and 2008-09, which the Revenue considered as falling under BAS. The appellant contended that the ACP cladding service was essentially commercial or industrial construction service under Section 65(25b) of the Act, particularly related to civil construction. The Deputy Commissioner confirmed the service tax, and the Commissioner (Appeals) upheld the decision, stating that services provided in relation to road works under BAS are taxable.

The appellant argued that the service provided for toll gates, involving ACP cladding, was related to roads and hence excluded from commercial or industrial construction service. The appellant emphasized that no processing or production of goods for the recipient was involved in ACP cladding, making it outside the scope of BAS. However, the show cause notice and adjudication order lacked specific details about the nature of the service provided by the appellant for ACP cladding.

The Tribunal observed that the adjudication order failed to address the appellant's contention that the service fell within commercial or industrial construction service. The authority did not resolve the dispute regarding the classification of services, as mandated by Section 65A of the Act. The lack of specifics in the show cause notice also deprived the appellant of adequate notice. Consequently, the Tribunal found the adjudication order and the Commissioner (Appeals) decision unsustainable and allowed the appeal, setting aside the appellate order without imposing any costs.