2016 (12) TMI 1334 - AT - Service Tax

Benefit of abatement in terms of Notification No. 15/2004-ST dated 10.9.2004 and subsequent Notification No. 1/2006-ST dated 1.3.2006 - commercial and industrial construction activities - denial on the ground that the service provider has supplied the cement, steel and RMC, free of cost - Held that - the issue now stands decided by the Larger Bench of the Tribunal in the case of M/s Bhayana Builders (P) Ltd. Vs. CST 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) , where it was held that such works contract is taxable only with effect from 1.6.2007 - Inasmuch as the period in the present case is prior to 1.6.2007, no differential demand can be raised against them - matter remanded for fresh consideration - appeal allowed by way of remand.

Summary

Issues:
Denial of abatement benefit under Notifications No. 15/2004-ST and 1/2006-ST due to free supply of materials; Applicability of works contract taxation pre-1.6.2007.

Analysis:
The appellant, engaged in construction activities, was denied abatement benefit as the service provider supplied cement, steel, and RMC free of cost. The issue was previously decided by the Larger Bench in the case of M/s Bhayana Builders. The appellant argued that they provided services under a works contract, citing the Supreme Court's decision in CCE Kerala Vs. Larsen & Toubro Ltd., stating works contracts were taxable only post-1.6.2007. As the present case predates this date, the same principle should apply, preventing any differential demand.

The Departmental Representative requested setting aside the impugned order for a fresh examination of works contracts in light of the legal precedents mentioned. The appellant had no objections to this request. Consequently, the Tribunal set aside the order and remanded the matter to the original adjudicating authority. Notably, the Tribunal clarified that they did not provide any findings on the issues, leaving all matters open for the adjudicating authority to re-decide.

This judgment highlights the importance of legal precedents in tax matters and the need for a thorough examination of works contracts concerning abatement benefits and taxation timelines. The decision showcases the Tribunal's commitment to ensuring proper adjudication based on relevant legal principles and precedents, emphasizing the significance of legal interpretations in tax disputes.