2015 (1) TMI 548 - AT - Service Tax

Goods Transport Agency Service - construction and maintenance of sewage treatment plants, effluent treatment plants and water treatment plants - Held that - The major portion of the demand relates to EPC contracts for constructing the effluent and water treatment plants - against most contracts, the specific service under the Finance Act, 1994 under which the activity falls is not stated; rather the description of service is mentioned generally - department has to first fix the classification of a particular activity and only then proceed to work out the demand of service tax which is due. This is necessary because different services may operate under different schemes, different notifications, different abatements etc. The classification under which charge of non payment is made in the show cause has not been specified. Secondly, there is reference during the period in dispute. We also note that the adjudicating authority has not applied the relevant law for determining at what stage service tax payment is due. In the present case, it was due on receipt of payment for the services whereas the adjudicating authority has ignored this issue altogether. - Assessee is directed to deposit ₹ 10,00,000 towards the GTA service provided by them - Matter remanded back.

Issues:
1. Service tax liability on construction activities for government bodies.
2. Service tax liability on Goods Transport Agency Service.
3. Classification of services for determining service tax liability.
4. Application of relevant law for determining service tax payment due.

Analysis:
1. The appellant, engaged in constructing and maintaining sewage treatment plants, effluent treatment plants, and water treatment plants, contested the service tax demand of Rs. 31.82 crores. The major amount of Rs. 29.44 crores was related to contracts for constructing plants for Municipal bodies and Government. The appellant argued that the specific service for demanding service tax was not mentioned in the show cause notice or adjudication order. The appellant claimed that service tax should have been paid on a receipt basis during the disputed period of 2006-07 to 2010-2011. The department, however, contended that the nature of service was specified in the notice and correctly demanded service tax.

2. Regarding the service tax demanded on Goods Transport Agency Service, the appellant admitted liability of Rs. 16,00,000. The Tribunal observed that the classification of activities under the Finance Act, 1994 was not clearly stated in the show cause notice. The Tribunal agreed with the appellant that the department should classify the activities before determining the service tax due. Additionally, the Tribunal noted that the relevant law for determining when the service tax payment is due was not applied correctly by the adjudicating authority. Therefore, the Tribunal ordered the appellant to deposit Rs. 10,00,000 towards the Goods Transport Agency Service and remanded the case for a fresh consideration of all factual and legal issues with a personal hearing opportunity for the appellant.

3. The judgment highlighted the importance of correctly classifying services for determining service tax liability. It emphasized the need for specifying the classification under which the charge of non-payment is made, considering different schemes, notifications, and abatements. The Tribunal stressed that service tax payment should align with the stage of service provision, such as payment receipt. Failure to apply the relevant law for determining the due service tax payment could result in a remand for reevaluation.

4. In conclusion, the Tribunal's decision focused on addressing the issues raised by the appellant regarding service tax liability on construction activities and Goods Transport Agency Service. By emphasizing the correct classification of services and the application of relevant laws for determining service tax payment due, the Tribunal provided a clear direction for the adjudicating authority to reconsider the case in light of the legal and factual aspects raised by the appellant.

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