2015 (5) TMI 634 - AT - Service Tax

Rejection of the refund claim - Erection, Commissioning or Installation service - benefit of Notification No. 19/03 - claim of rebate / abatement of 67% - Held that - Vivisection of Works Contract was permissible before the introduction of service tax on Works Contract service. If the service component of an activity was covered under any other category of service under the Finance Act 1994, it would be leviable to service tax. - what has been erected by them is basically a structure. At the same time, on a query from the bench, it was revealed that the multi-parking car system also includes hydraulic systems/ lifts. - it has to be examined whether the whole parking system can be termed as a structure or it should be considered as having two components namely a civil structure and the hydraulic/lift system. We find these factual details have not been examined by the adjudicating authority or the appellate authority with reference to the definition of erection, commissioning or installationas it underwent amendments from 2003 to 2006. The matter, therefore, needs to be remanded back to the adjudicating authority for a careful analysis of facts vis-a-vis the statute prevailing at the relevant time. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection based on service tax liability for supply and erection of car parking systems under Erection, Commissioning or Installation service category.

Analysis:
The appellant filed a refund claim challenging the imposition of service tax on their activity of supply and erection of car parking systems. The appellant contended that their activity should be considered as the erection of structures, which only became taxable under the service category of erection, commissioning, or installation in May 2006. They argued that the bills raised by them and the dictionary meaning of structure supported their claim. On the other hand, the revenue argued that the activity involved the erection of equipment due to the inclusion of hydraulic systems for shifting cars in the parking system.

The Tribunal noted that the appellant had been paying tax under the Works Contract Act before the introduction of service tax on Works Contract service. However, the Tribunal referred to a previous judgment stating that if the service component of an activity fell under any other service category under the Finance Act 1994, it would be subject to service tax. The Tribunal disagreed with the appellant's argument in this regard.

Nevertheless, the Tribunal acknowledged that the definition of Commissioning or Installation was amended in October 2004 to include the word "erection," and the term "erection of structures" was introduced in May 2006. The Tribunal found merit in the appellant's claim that what they erected could be considered a structure. However, since the parking system also included hydraulic systems/lifts, the Tribunal decided that a detailed analysis was required to determine whether the entire system should be classified as a structure or as having separate components. The Tribunal observed that such analysis had not been conducted by the lower authorities concerning the evolving definition of erection, commissioning, or installation from 2003 to 2006.

As a result, the Tribunal allowed the appeal by remanding the case back to the adjudicating authority for a thorough examination of the facts in light of the statutory provisions applicable at the relevant time. The Tribunal emphasized the need for a careful analysis of whether the parking system should be considered a structure or a combination of civil structure and hydraulic/lift system. All issues were kept open for further consideration by the adjudicating authority.