2015 (10) TMI 2158 - AT - Service Tax

Works Contract Liability of service tax prior to 1.06.2007 Appellant contends that execution of construction was undertaken under a works contract Whether payments received after 01/06/2007 is in respect of continuing work contract or completed work contract? - Held That - Service tax liability under works contract is leviable w.e.f. 01/06/2007 and the same cannot be vivisected into different services prior to 2007 Decision made in case of Commissioner of Central Excise & Customs vs. Larsen &Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT followed Matter remanded back to adjudicating authority for conclusion on payments Decided partly in favour of assessee.

Summary

Issues involved: Service tax liability on services rendered for construction of residential complexes and commercial/industrial constructions during 2005-2009 under works contract; Classification of services under individual service or works contract; Applicability of service tax pre and post 01/06/2007; Payments received post 01/06/2007 in relation to works contract executed before or after the said date.

Analysis:
1. Service Tax Liability on Construction Services: The main issue revolved around the service tax liability on the construction services provided by the appellant for residential and commercial/industrial complexes during the period 2005-2009. The Revenue contended that the appellant was liable for service tax under individual services, whereas the appellant argued that the construction was executed under a works contract as awarded by NDDB, MHADA, and CIDCO.

2. Classification of Services: The Tribunal found that the construction activities undertaken by the appellant fell under the category of a works contract as awarded to them. It was acknowledged that the appellant used their own materials in the construction and paid works contract tax/VAT to the State government authorities. The appellant did not contest the tax liability under the works contract post 01/06/2007.

3. Applicability of Service Tax Pre and Post 01/06/2007: The Tribunal relied on the judgment of the Hon'ble Supreme Court in the case of Commissioner of Central Excise & Customs vs. Larsen & Toubro Ltd., which clarified that service tax liability under works contracts is leviable from 01/06/2007 and cannot be separated into different services prior to that date. The Tribunal followed the Supreme Court's interpretation of the Finance Act, 1994, emphasizing that the taxation was intended for service contracts simpliciter, not composite works contracts.

4. Payments Received Post 01/06/2007: The Departmental Representative raised concerns about payments received by the appellant post 01/06/2007, questioning whether they were for works contracts executed before or after that date. The Tribunal remanded the matter to the adjudicating authority to determine if the payments post 01/06/2007 were related to continuing or completed work contracts.

5. Conclusion: Ultimately, the Tribunal held that the impugned order was unsustainable based on the Supreme Court's judgment and set it aside. It was concluded that the service tax liability on the work contract prior to 01/06/2007 could not be separated. The appeal was disposed of accordingly.