2015 (2) TMI 308 - AT - Service Tax

Classification of service - commercial or industrial construction service (CICS) or the construction of complex service (CCS) - Appellants are providing pre-construction anti-termite treatment - Held that - Even the Board s Circular No.96/7/2007-ST dated 23.08.2007 also nowhere states that all the services provided by a sub-contractor to the main contractor would necessaryily fall under the same classification which is applicable to the service rendered by the main contractor. Thus the lower authorities have clearly misread the said CBEC Circular to hold that the appellants were providing CICS/CCS. Coming back to the legal provisions, it is well settled that the classification of a service is to be determined with respect to the nature thereof vis-a-vis the definitions of various services given in Section 65 read with section 65 A of the Finance Act 1994. Perusal of various job works awarded to the appellants reveals that they were required to provide pre-construction anti-termite treatment. This activity can by no stretch of imagination be covered under the definition of CICS or CCS. Thus, the activity of pest control could arguably be covered under cleaning services only and only if it was being performed on commercial or industrial buildings and premises thereof or factory plant or machinery tank or reservoir of such commercial or industrial buildings and premises thereof. However, we are not expressing any view in this regard and only making a reference to it to show that this also lends support to the view that the appellants service was not covered under CICS/CCS. - Impugned order unsustainable - Decided in favor of assessee.

Summary

Issues:
Classification of service for service tax liability based on the nature of service provided by sub-contractors in relation to commercial or industrial construction service (CICS) or construction of complex service (CCS).

Analysis:
The case involved a stay petition and appeal against an order confirming a service tax demand of Rs. 6,78,356 along with interest and penalties under sections 77 and 78 of the Finance Act, 1994. The dispute arose from the classification of service provided by the appellants, who offered pre-construction anti-termite treatment to contractors engaged in CICS or CCS. The lower authorities classified the appellants' service under CICS or CCS based on a CBEC Circular, leading to the imposition of service tax liabilities.

The appellants argued that their service was distinct from CICS or CCS as they provided anti-termite treatment involving soil treatment before construction activities. They contended that their service could potentially fall under cleaning services introduced in 2005 if performed on commercial or industrial buildings. The Revenue Authority, however, maintained that the activity was related to CICS or CCS, justifying the classification under those categories.

Upon review, the Tribunal scrutinized the CBEC Circular and legal provisions to determine the service's classification. The Tribunal emphasized that the nature of the service should align with defined categories in the Finance Act. The Tribunal highlighted precedents where service tax on pest control services was not levied under CICS or CCS, emphasizing that service classification remains consistent regardless of the recipient.

Furthermore, the Tribunal referenced the definition of cleaning activity under taxable services, indicating that pest control services could potentially fall under cleaning services if performed on specific premises. However, the Tribunal refrained from a definitive ruling on this aspect, reinforcing the argument that the appellants' service did not fit under CICS or CCS.

Ultimately, the Tribunal found the lower authorities' decision flawed, as the appellants' service did not align with CICS or CCS definitions. Consequently, the Tribunal waived the pre-deposit requirement and allowed the appeal, deeming the impugned order unsustainable based on the service's nature and classification criteria outlined in the Finance Act.