2017 (2) TMI 490 - AT - Service Tax

Construction of petrol pumps for Indian Oil Corporation Ltd. - classified under the head Erection, Commissioning & Installation Service or under the head Works Contract Service? - Held that - the learned Commissioner have erred in holding that service tax is payable inspite of goods/material being used in execution of the contract for Indian Oil, supplied by the assessee contractor and admittedly VAT works contract tax have been paid - the classification adopted in the impugned order Erection Commissioning and Installation Service is not tenable and palpably wrong - the service rendered by the appellant is classifiable under Works Contract Service as defined under Section 65 (105) (zzzza) - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Cross appeal against Service Tax demand, classification of service under Erection, Commissioning & Installation Service vs. Works Contract Service.

Analysis:
1. Classification of Service: The case involved a dispute regarding the classification of services provided by the appellant in constructing petrol pumps for an oil corporation. The Revenue contended that the activity fell under "Erection, Commissioning & Installation Service" under Section 65(39a) of the Finance Act, 1994, leading to a demand for Service Tax. The appellant argued that the service should be classified as Works Contract Service under Section 65(105)(zzzza) due to the use of materials in execution. The Commissioner upheld the demand, but the Tribunal disagreed, ruling that the service rendered by the appellant was classifiable under Works Contract Service, not Erection, Commissioning & Installation Service.

2. Legal Interpretation: The appellant's counsel referred to a previous ruling by the Hon'ble CESTAT in the case of Alstom Projects India Ltd. v/s Commissioner of Service Tax, Delhi, emphasizing that even if the work contract tax was paid by the oil corporation, the services were still liable to service tax. However, the Tribunal found this argument untenable in light of the Supreme Court ruling in Commissioner of Central Excise v/s Larsen & Toubro Ltd., which supported the classification of the service as Works Contract Service due to the use of materials in execution.

3. Decision: After considering the arguments from both sides, the Tribunal concluded that the service provided by the appellant should be classified as Works Contract Service, not Erection, Commissioning & Installation Service. As a result, the impugned order demanding Service Tax was set aside, and the appellant's appeal was allowed with consequential benefits. On the other hand, the Revenue's appeal was dismissed. The Tribunal's decision was based on the interpretation of relevant legal provisions and the nature of the services provided by the appellant in the construction of petrol pumps.

This detailed analysis highlights the key legal issues, arguments presented by both parties, relevant legal precedents, and the final decision rendered by the Tribunal, providing a comprehensive understanding of the judgment.