2016 (3) TMI 999 - AT - Service Tax

Imposition of penalty - Service Tax liability along with interest on the service rendered under the category of Installation & Commissioning Services - Held that - the penalty imposed on the appellant is unwarranted as the Service Tax liability and interest thereof was paid by the appellant before the issuance of show-cause notice. Provisions of Section 73(3) of the Finance Act, 1994 would apply, which is settled by the judgments of Tribunal. Accordingly, the impugned order imposing the penalties is liable to be set aside. Liability of Service tax from 10.09.2004 - Construction Services and Commercial & Industrial Services - Construction of new retail outlets and its related works, supplying all the materials involved for completion of the work under the contract and were to be paid as per rate agreed upon - Held that - the job executed by the appellant would be a works contract . By relying on the judgment of 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 , no Service Tax liability arises under any services for the work/job executed under Works Contract Services. Therefore, demand of Service Tax under Commercial or Industrial Services is liable to be set aside. Consequent penalties imposed are also set aside. - Appeal disposed of

Summary

Issues:
1. Whether the services rendered by the appellant during a specific period constitute 'Installation & Commissioning services' and 'Construction services' for the purpose of Service Tax liability.

Analysis:
The appeal in question was against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai Zone -I. The primary issue for consideration was whether the services provided by the appellant between 2003-2004 fell under 'Installation & Commissioning services' and subsequently under 'Construction services' from 10.9.2004 onwards, thereby attracting Service Tax liability. The appellant was executing a contract for the construction of new retail outlets and related works for Indian Oil Corporation Ltd. It was established that the appellant had also rendered Installation & Commissioning Services during the relevant period.

The appellant had already discharged the Service Tax liability for Installation & Commissioning Services before the show-cause notice was issued and did not dispute the same. However, regarding the construction works, the appellant argued that Service Tax liability under 'Works Contract services' was introduced only from 01.06.2007, citing a precedent from Larsen & Toubro Ltd. The Departmental Representative contended that penalties should be imposed as the Service Tax liability was paid after being pointed out by Investigating Authorities.

The Tribunal found that the Service Tax liability for Installation & Commissioning Services, along with interest, had been settled by the appellant before the show-cause notice was issued. Therefore, penalties imposed on this aspect were deemed unwarranted, in line with Section 73(3) of the Finance Act, 1994. The Tribunal upheld the demand with interest but set aside the penalties. Concerning the Service Tax liability for construction works from 10.09.2004 onwards, it was established that the job executed by the appellant constituted a 'works contract,' and the liability for Service Tax under 'Commercial or Industrial Services' did not arise before 01.06.2007, as per the precedent set by Larsen & Toubro Ltd. Consequently, the demand for Service Tax and penalties under this category were also set aside.

In conclusion, the Tribunal disposed of the appeal by upholding the demand for Service Tax under Installation & Commissioning Services but setting aside the penalties. The demand for Service Tax under Construction Services from 10.09.2004 onwards was also set aside, along with the associated penalties.