2023 (3) TMI 1393 - AT - Service Tax

Demand of differential duty - Erection, Installation Commissioning Services - benefit of Notification No.1/2006-ST dated 01.03.2006 denied - Revenue is of the view that the appellant is not entitled for the benefit of the said Notification as it is purely a service contract - HELD THAT - There is not dispute, the services in question have been supplied by the appellants along with the materials, for which, the appropriate classification is Works Contract Service , which came into service tax net from 01.06.2007. As per the decision of the Hon ble Apex Court in the case of Larsen Toubro Limited 2015 (8) TMI 749 - SUPREME COURT , this issue has been clarified and after going through the said judgement, we hold that for the period prior to 01.06.2007, the demand under the category of Erection, Installation Commissioning Services , was not sustainable as the appropriate classification is Works Contract Service . Admittedly, no demand has been made for the period prior to 01.06.2007 under the Works Contract Service . Therefore, the demand of service tax from the appellants does not survive prior to 01.06.2007. For the period post 01.06.2007, it is held that the appellant is entitled for the benefit of Notification No.01/2006-ST dated 01.03.2006. The said Notification narrates that if the assessee supplied the services along with materials and the value of service cannot be quantified, in that that circumstances, the assessee is entitled for 67% abatement of the total service provided by the assesse. The same is the proportion under Works Contract Service , wherein the assesse is liable to pay service tax on 33% of the gross value of service provided. In that circumstances also, the appellant has paid service tax of 33% of the gross value of service provided in question. In that circumstances, the demands against the appellants are not sustainable. Thus, all the demands are barred by limitation as the issue of taxability was in dispute during the impugned period and the show-cause notices were issued by invoking extended period of limitation. There are no merit in the impugned orders and the same are set aside - appeal allowed.

Summary

Issues involved: Classification of services under "Works Contract Service" for the period pre and post 01.06.2007, entitlement to benefit of Notification No. 1/2006-ST dated 01.03.2006, applicability of service tax, invocation of extended period of limitation for demand of service tax, imposition of penalties.

Analysis:

1. Classification of Services - Pre 01.06.2007:
The appellants argued that prior to 01.06.2007, the service in question should be classified as "Works Contract Service," and therefore, no service tax is payable for the period before this date. They relied on legal precedents to support their claim. The tribunal agreed, citing the decision in the case of Larsen & Toubro Limited, clarifying that the demand under "Erection, Installation & Commissioning Services" was not sustainable before 01.06.2007. Consequently, no service tax demand was upheld for this period.

2. Classification of Services - Post 01.06.2007:
For the period post 01.06.2007, the tribunal examined whether the appellants were entitled to the benefit of Notification No. 1/2006-ST dated 01.03.2006. The notification allowed for 67% abatement if services were supplied along with materials. The tribunal found that the appellants had paid service tax based on this abatement provision, and therefore, the demands against them were not sustainable for this period as well.

3. Invocation of Extended Period of Limitation:
The appellants contended that the demands were barred by limitation as the issue of taxability was in dispute during the relevant period. The tribunal agreed, holding that all demands were indeed barred by limitation since the show-cause notices were issued invoking the extended period of limitation.

4. Imposition of Penalties:
No specific mention of penalties being imposed was made in the summary provided.

5. Final Decision:
After considering the arguments from both sides and analyzing the scope of work and legal provisions, the tribunal found no merit in the impugned orders. Consequently, the orders were set aside, and the appeals were allowed with any consequential relief.

This detailed analysis of the judgment highlights the key legal issues involved, the arguments presented by the parties, the tribunal's reasoning based on legal precedents and provisions, and the final decision rendered on each issue.