2016 (7) TMI 89 - AT - Service Tax

Construction services - Levy of service tax on works contract prior ot 1.6.2007 - inclusion of value of free supplies - eligibility of Composition Scheme - abatement of 67% - Held that - construction of hospitals for charitable organization (e.g. B.L. Kapoor Hospital) is covered within the scope of the scope of commercial construction and hence liable to S.T. under C.I.C.S.. Matter remanded back for de novo adjudication as the demand/interest/penalties will have to be re-determined.

Summary

Issues:
1. Appeal against Order-in-Original confirming service tax demand.
2. Clarity on various issues post-judicial pronouncements.
3. Request for remittance to primary adjudicating authority.
4. Applicability of C.I.C.S. to construction of hospital building for a charitable organization.
5. De novo adjudication based on cited judgments.

Analysis:
The appeal was filed against an Order-in-Original confirming a substantial service tax demand along with interest and penalty. The appellant's advocate argued that certain issues in the case have been clarified by higher judicial fora, necessitating a remittance to the primary adjudicating authority for fresh adjudication. These issues include the non-liability of works contracts to service tax pre-1.6.2007, admissibility of 67% abatement even without free supplies, ineligibility for Composition Scheme for contracts pre-1.6.2007 post-tax classification change, and the service tax liability concerning the supply of RMC, as per relevant judicial pronouncements.

The Revenue's representative did not oppose the remittance for de novo adjudication but highlighted that construction of a hospital building for a charitable organization falls under C.I.C.S. The Tribunal acknowledged the need for a fresh adjudication in light of the cited judgments, including the appellant's previous case where hospital construction for a charitable organization was deemed liable to service tax under C.I.C.S. The Tribunal set aside the impugned order and remanded the case to the primary adjudicating authority for reevaluation based on the mentioned judgments, ensuring the appellant's right to be heard before the fresh adjudication process commences.

Therefore, the Tribunal's decision focused on the necessity of reevaluation due to the clarified legal positions post-judicial pronouncements, specifically addressing the issues raised by the appellant and the Revenue. The remittance for de novo adjudication aims to ensure a fair assessment in accordance with the relevant legal precedents, including the specific judgment related to hospital construction for charitable organizations.