2016 (3) TMI 166 - AT - Service Tax

Refund claim - Service tax paid under Erection Commissioning and Installation service during the period March 2007 - Appellant has to design supply testing erection and commissioning of Auto LPG Dispensing System on lumpsum turnkey basis. It mistaken interpretation of law and discharged the Service Tax liability on 33% of the contract value under the category of Erection Commissioning and Installation service while he was not required to do so and subsequently on being pointed out by their customer appellant registered themselves under works contract and again discharged the Service Tax liability as applicable - Held that by applying the case of Commissioner of Central Excise & Customs Kerala Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT the Service tax liability will not arise when works contract is executed under any other services prior to 01.06.2007. - Decided in favour of appellant with consequential relief

Summary

Issues:
- Eligibility for refund of Service Tax paid under the category of Erection, Commissioning, and Installation service for the period before 01.06.2007.

Analysis:
The appeal was filed against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune-III. The appellant had filed a refund application for Service Tax paid under Erection, Commissioning, and Installation service for a specific period. The appellant entered into a contract with a company for the supply, erection, and commissioning of an Auto LPG Dispensing System. Initially, the appellant paid Service Tax under the Erection, Commissioning, and Installation service category. However, the client informed them to charge only 2% of the contract value under Works Contract Service after a certain date. The appellant then registered under Works Contract Service and paid Service Tax accordingly. The adjudicating authority allowed the refund claim, but the first appellate authority reversed this decision.

The appellant argued that the contract was a works contract and relied on a judgment of the Hon'ble Apex Court to support their position. The Departmental Representative contended that the appellant had availed abatement and should not be eligible for a refund as the services provided fell under Erection, Commissioning, and Installation service. The Tribunal analyzed the works order and contract terms, concluding that the appellant had considered it a works contract and had paid appropriate taxes to the Government of Maharashtra. The Tribunal agreed with the appellant's interpretation and application of the law, citing the judgment of Larsen & Toubro Ltd. by the Hon'ble Apex Court, which clarified that before 01.06.2007, Service Tax liability did not arise for works contracts under other services.

Therefore, the Tribunal held in favor of the appellant, stating that the issue was covered by authoritative pronouncements. The impugned order was deemed unsustainable, set aside, and the appeal allowed with consequential relief.