2019 (1) TMI 1789 - AT - Service Tax

Commercial or Industrial Construction Service (CICS) - composite contracts for fabrication and erection of sliding gates, rolling shutters, etc., on Works Contract - period involved is from 16.06.2005 to 30.09.2006 - HELD THAT - The appellant has, all throughout, right from the reply to the Show Cause Notice, been maintaining that the activity done by them would fall under Works Contract Service. We find from paragraph 1 of the Show Cause Notice dated 06.01.2009, that the same also acknowledges that the appellant had undertaken composite contracts of supply/erection of the said items - the ratio laid down by the 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 will apply on all fours to the case on hand where it was held that Works contract were not chargeable to service tax prior to 1.6.2007. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Interpretation of composite contracts for fabrication and erection of sliding gates, rolling shutters, etc., on Works Contract basis.
2. Applicability of tax liability under Commercial or Industrial Construction Service (CICS).
3. Benefit under Notification No. 12/2003-ST dated 20.06.2003.

Analysis:

Issue 1: Interpretation of composite contracts for fabrication and erection of sliding gates, rolling shutters, etc., on Works Contract basis.
The appellant argued that the activity undertaken by them falls under Works Contract, citing the precedent set by the Hon’ble Apex Court in a specific case. The Show Cause Notice acknowledged that the appellant had undertaken composite contracts. The Tribunal found that the appellant's activity indeed qualified as a Works Contract Service. Relying on the precedent established by the Hon’ble Apex Court, the Tribunal concluded that the impugned Order demanding tax liability under a different category could not be sustained. Consequently, the Tribunal set aside the impugned Order.

Issue 2: Applicability of tax liability under Commercial or Industrial Construction Service (CICS).
The appellant contended that the Show Cause Notice demanding tax liability under CICS was not valid based on the nature of the activity being a Works Contract. The respondent supported the impugned Order, emphasizing the improper availment of benefits under a specific notification. After hearing both sides and examining the facts, the Tribunal found that the appellant's activity clearly fell under Works Contract Service. As a result, the Tribunal ruled that the tax liability under CICS was not applicable, in line with the precedent set by the Hon’ble Apex Court.

Issue 3: Benefit under Notification No. 12/2003-ST dated 20.06.2003.
The respondent flagged the improper availment of benefits under Notification No. 12/2003-ST dated 20.06.2003 in connection with the Show Cause Notice. However, the Tribunal's decision to classify the appellant's activity as a Works Contract Service rendered this argument moot. The Tribunal's ruling in favor of the appellant meant that the benefit under the mentioned notification did not apply in this case.

In conclusion, the Tribunal allowed the appeal, providing consequential benefits as per the law. The judgment highlighted the importance of correctly interpreting the nature of contracts and applying relevant legal precedents to determine tax liabilities in such cases.