2016 (10) TMI 579 - AT - Service Tax

Levy of service tax prior to 01.06.2007 - works contract - management, maintenance or repair service - erection, and commissioning or installation services - services under the works contract was introduced w.e.f. 01.06.2007 - whether denial of demand of service tax justified on the ground that the services of appellant comes within the ambit of works contract? - Held that - the decision in the case of L&T Ltd. vs, CCE Kerala 2015 (8) TMI 749 - SUPREME COURT apply where it was held that the services falling under the category of works contract cannot be taxed prior to 01.06.2007. Demand of service tax not sustainable - appeal rejected - decided against Revenue.

Summary

Issues: Revenue's appeal against order passed by Commissioner (A) regarding service tax on works contract services.

Analysis:
1. The Revenue appealed against the order passed by the Commissioner (A) regarding the imposition of service tax on works contract services provided by the assessee. The Commissioner (A) had allowed the appeal, setting aside the demand for service tax based on the nature of services provided by the assessee.

2. The Commissioner (A) noted that the services provided by the appellant involved the consumption of goods in providing the service, under a contract that involved the transfer of property. The Commissioner (A) observed that the services clearly fell under the category of work contract service, which became taxable from 01.06.2007. The Commissioner (A) referenced the appellant's sales tax returns and other certificates to establish the nature of the services provided, which involved the transfer of property and payment of sales tax on goods.

3. The Tribunal considered the grounds on which the demand for service tax was set aside by the Commissioner (A), noting that the entire period in question was prior to 01.06.2007 when works contract services were brought under the service tax net. Both parties agreed that the issue was settled by a decision of the Hon'ble Supreme Court in the case of L&T Ltd. vs. CCE Kerala, where it was held that services falling under the works contract category could not be taxed before 01.06.2007.

4. Based on the above analysis and the legal precedent set by the Supreme Court, the Tribunal rejected the appeal filed by the Revenue. The Tribunal upheld the decision of the Commissioner (A) to set aside the demand for service tax on the grounds that the services provided by the assessee fell under the works contract category, which was not taxable prior to 01.06.2007.

This comprehensive analysis highlights the key legal points and reasoning behind the Tribunal's decision to reject the Revenue's appeal in the case involving the imposition of service tax on works contract services.