2016 (1) TMI 703 - AT - Service Tax

Works contract - construction of residential houses - taxability prior to 01/06/2007 and after - Held that - the applicant is not liable for service tax for construction of independent houses, in view of the Tribunal s decision in Macro Marvel Projects Ltd. vs. CST, Chennai 2008 (9) TMI 80 - CESTAT, CHENNAI . The service tax liability of the applicant for the period prior to 01/06/2007 is not on strong ground. Similarly, the tax liability under Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana in terms of Notification No. 28/2010-ST appears not sustainable. The applicants do not have prima facie case regarding claim of pure supply of goods contract, construction of godown and fencing and other work done for Nagar Nigam etc. Considering all these facts and also the fact that they have discharged service tax of ₹ 7.38 lakhs already, we find it fit and proper to order for further deposit of ₹ 7.5 lakhs with proportionate interest - stay granted partly.

Summary

Issues:
1. Service tax liability for various taxable services provided by the applicants.
2. Applicability of service tax on construction activities such as residential houses, pipelines, godowns, and complex under specific missions.
3. Classification of services under "work contract" service.
4. Dispute regarding service tax liability for contracts entered into before and after 01/06/2007.
5. Contestation over service tax liability for supply of goods within composite contracts.
6. Justifiability of tax liability for construction of godowns and other related services.
7. Assessment of the arguments presented by both parties and determination of the need for further deposit to stay recovery of adjudicated tax liability.

The judgment addresses the service tax liability of the applicants concerning various taxable services they provided, including construction services. The Commissioner confirmed a demand for payment of &8377; 53,66,681 and imposed penalties under relevant sections of the Finance Act, 1994. The applicants appealed this decision and sought a stay on the recovery of the adjudicated amount. The Counsel for the applicants argued against the service tax liability for specific activities, citing precedents and exemptions. The contention included the non-liability of service tax for construction of independent houses, pipelines, godowns, and projects under certain missions. The Counsel also claimed that the services provided were rightly classifiable under "work contract" service. Additionally, disputes arose regarding the liability for contracts entered into before and after 01/06/2007, as well as for the supply of goods within composite contracts.

The Tribunal analyzed the arguments presented by both parties and found that the applicants were not prima facie liable for service tax on the construction of independent houses based on a previous Tribunal decision. The liability for the period before 01/06/2007 was deemed not on strong ground. Similarly, the tax liability under specific missions appeared unsustainable. However, the Tribunal did not find a prima facie case regarding the claim of pure supply of goods contracts, construction of godowns, and other related services. Considering these factors and the amount already paid by the applicants, the Tribunal ordered a further deposit of &8377; 7.5 lakhs with interest within six weeks. This deposit would stay the recovery of the remaining adjudicated tax liability and penalties until the appeal's disposal. The Tribunal provided a deadline for compliance with this order.

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