2018 (12) TMI 1788 - AT - Service Tax

Short payment of service tax - Commercial industrial building and civil structures and work contract service - service tax on construction of college Building not paid - appellant's case is that services of construction of college building, are exempted from payment of service tax vide Board Circular No. 80/10/2004-ST dated 17 September 2004 - HELD THAT - The tax invoices issued by the appellant to M/s Devi Shakuntala Thakral Charitable Foundation for construction of college building are all dated before 01 July 2012, we also find that as per the provision of point of taxation Rule 11, the date of invoice is relevant for application of the service tax liability as the completion of the service has been before 01 April 2012 when the new service tax regime has come into operation and invoices has raised much before 01 July 2012 - the scope of applicability of the service tax with regard to the construction service for charitable institution, education institution, as mentioned above, have been exempted since there is no denying of the fact that the construction undertaken by the appellant was of a education institution, therefore, the service provided by the appellant to M/s Devi Shakuntala Thakral Charitable Foundation was not taxable - demand set aside. Whether it is a fact that appellant have provided work contract service to M/s Central Warehousing Corporation and Industrial Rail Warehousing Company after 01 July 2012 and as per the provisions of Notification No. 30/2012 dated 20 June 2012 - whether the appellant was only liable to pay 50% of service tax due on the services provided by them to above-mentioned cooperate bodies? - HELD THAT - It is a matter of record that the construction activity undertaken by the appellant involved both supply of the goods as well as supply of the labour and services and, therefore, as per the definition of the work contract service and as held by Hon‟ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , the activity of the appellant is rightly classifiable under the category of the work contract service as per the provisions of Section 65 (105) (zzzza) - The Notification No. 30/2012 dated 20 June 2012 provides that when any individual, or Hindu undivided family or partnership firms provides a work contract service to a registered body cooperate, the service tax payable by the provider of the service will be 50% and the balance 50% of the service tax need to be paid by the recipient of the service - the construction activity undertaken by the appellant for M/s CWC and others is rightly classifiable under work contract service - demand do not arise. There is no service tax liability emerges on the appellant on both the counts and, therefore, the order-in-appeal is without any merit and, therefore, set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the service tax was wrongly demanded for the construction service provided to a charitable foundation.
2. Whether the appellant was liable to pay only 50% of the service tax for work contract services provided to corporate bodies post-01 July 2012.

Issue-wise Detailed Analysis:

1. Service Tax Demand on Construction Service to Charitable Foundation:
The appellant provided construction services for a college building under a contract with a charitable foundation. The officers observed a discrepancy between the gross receipt and the taxable value declared by the appellant. The appellant contended that the construction of the college building was exempt from service tax as per Board Circular No. 80/10/2004-ST dated 17 September 2004, which exempts services provided to charitable institutions from service tax. The Commissioner (Appeals) rejected this claim, citing the date on the completion certificate as post-01 July 2012, when the exemption was removed. However, the Tribunal found that the tax invoices were dated before 01 July 2012, making the Board’s Circular applicable. The Tribunal held that the construction service for the charitable educational institution was non-commercial and thus not taxable.

2. Liability of 50% Service Tax for Work Contract Services Post-01 July 2012:
The appellant argued that the services provided to the Central Warehousing Corporation were work contract services, involving both goods and labor. According to the Supreme Court judgment in Commissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro, such services fall under the category of work contract services. As per Notification No. 30/2012-ST dated 20 June 2012, only 50% of the service tax liability is to be borne by the service provider, with the remaining 50% to be paid by the service recipient. The appellant claimed to have paid more than 50% of the service tax due. The Tribunal agreed, stating that the appellant's services were rightly classifiable as work contract services and that the service recipient, being a corporate body, was liable for 50% of the service tax.

Conclusion:
The Tribunal concluded that there was no service tax liability on the appellant for both issues. The construction service provided to the charitable foundation was exempt from service tax, and the appellant had correctly paid more than 50% of the service tax for work contract services provided to corporate bodies. Consequently, the order-in-appeal was set aside, and the appeal was allowed.