2014 (2) TMI 710 - AT - Service Tax

Waiver of pre-deposit - classification - erection, commissioning and installation services - Held that - the service falls within the ambit of works contract service, an independent taxable service, introduced w.e.f.1.6.2007 and is required to be classified only as works contract service, in view of the classification discipline mandated by Section 65 (A) of the Act, the amount of ₹ 26,01,012/- being the tax liability assessed on Erection, Commissioning and Installation service is unsustainable. Insofar as Management, maintenance or repair service is concerned - The agreement between the petitioner and the Noida Authority requires the petitioner to take over the operation of DG sets and the pump houses and cater to the management, maintenance and repair of these equipment and infrastructure as well. We do not prima facie consider the operational responsibility to be the essence of the contract. The management of these movable or immovable properties is the essence of the agreement and the maintenance or repair is integral to the overall assumption of the management function. - there is no analysis on or reference to provisions of Section 65(64) of the Finance Act, which defines the taxable service of Management, Maintenance and Repair. Stay granted partly.

Summary

Issues:
1. Classification and tax liability of commercial or industrial construction service and construction of residential complex service.
2. Classification and tax liability of erection, commissioning, and installation services.
3. Classification and tax liability of management, maintenance, or repair services.
4. Jurisdictional issue regarding the adjudication order.

1. Commercial or Industrial Construction Service and Construction of Residential Complex Service:
The adjudication order confirmed a composite service tax demand on the petitioner for providing taxable services, including commercial or industrial construction service and construction of residential complex service. The petitioner did not contest the classification or tax liability for these services. The total assessed tax liability on these services was Rs.4,34,272/-. The balance tax liability was approximately Rs.35,000.

2. Erection, Commissioning, and Installation Services:
The petitioner argued that these services should be classified as works contract service under Section 65(105)(zzzzh) of the Finance Act, 1994, as they involved composite contracts with both service and goods elements. The tax liability assessed on these services was Rs.26,01,012. The Tribunal considered these services falling under works contract service introduced from 1.6.2007, and the tax liability was deemed unsustainable.

3. Management, Maintenance, or Repair Services:
The tax liability on these services was assessed at Rs.19,94,813. The Tribunal found that a portion of this amount related to erection, commissioning, and installation services rather than management, maintenance, or repair. The remaining amount was for services provided under works contracts for the operation and repair of pump houses and diesel generating sets. The Tribunal disagreed with the petitioner's contention that these activities did not fall under management, maintenance, or repair service, as the essence of the contract involved these aspects. The Tribunal granted a waiver of pre-deposit for a specific amount pending compliance.

4. Jurisdictional Issue:
The petitioner raised a jurisdictional issue regarding the adjudication order being passed by the Commissioner, Noida, despite the petitioner being a resident of Delhi. The Tribunal did not consider this contention due to lack of evidence of it being raised before the adjudicating authority, indicating a need for further analysis.

In conclusion, the Tribunal analyzed and ruled on the classification and tax liability of various services provided by the petitioner, granting waivers and stays based on the merits of each issue raised during the proceedings.