2023 (4) TMI 1329 - AT - Service Tax

Demand for service tax - Construction services - supply of materials - Services categorized as Erection and Commissioning instead of Works Contract - HELD THAT - It is seen that on a similar issue the Coordinate Bench of the Chennai in the case of Real Value Promoters Pvt Ltd 2018 (9) TMI 1149 - CESTAT CHENNAI has held that even for the period subsequent to June 2007, if a Show-Cause Notice is issued demanding Service Tax under another heading whereas the service pertains to Works Contract, the same does not survive. In this case, the demand is confirmed under Erection, Commissioning and Installation Services, whereas admittedly the appellant has undertaken Works Contract service. Hence the decision of Real Value Promoters Pvt Ltd 2018 (9) TMI 1149 - CESTAT CHENNAI is squarely applicable. Accordingly, the confirmed demand for the month of June 2007 is set aside. The appeal is allowed with consequential relief if any.

Summary

Issues involved: Confirmation of demands against the appellant for services categorized as Erection and Commissioning instead of Works Contract.

Summary:
In this case, the appellant's demands were confirmed on the basis that the services provided were deemed as Erection and Commissioning. The appellant argued that the works undertaken were actually in the nature of EPC/Works contract, not Erection and Commissioning. Referring to the show-cause notice and the agreement, it was highlighted that the appellant was responsible for supplying materials and services, falling under the category of Works Contract. Citing relevant case laws, the appellant contended that Service Tax could have been collected for the period prior to June 2007. The Adjudicating Authority's findings were reiterated by the learned AR.

The issue was found to be covered by a Supreme Court decision for the period June 2005 to May 2007, emphasizing the importance of separating the value of goods in a works contract. The judgment clarified that the levy of service tax should only be on works contracts containing a service element, derived from the gross amount charged for the works contract. The Chennai Coordinate Bench decision in a similar case further supported the appellant's argument, stating that if a Show-Cause Notice demands Service Tax under a different heading than the service provided pertains to Works Contract, the demand does not stand. As the appellant had undertaken Works Contract service, the confirmed demand for June 2007 was set aside.

Therefore, the appeal was allowed with any consequential relief granted.