2017 (3) TMI 1457 - AT - Service Tax

Short payment of tax - Erection, Commissioning & Installation Service - works contract service - Renting of Immoveable Property - Construction of Residential Complex Service - Held that - SCN is vague as it does not state the premises on the basis of which demand have been proposed under erection, commissioning and installation service . Without there being a finding of erection of any such commercial flats/residential complex - The SCN is also vague on account of not giving bifurcation of the demand year wise and category wise - so far demand of ₹ 15,48,599/- is concerned the same relates to laying of cables or electrical wires including poles for the same alongside or under the road and such work was not taxable to Service Tax in view of Circular dated 24-05-2010 - the demand of ₹ 5,88,991/- with respect to work done in the nature of internal and external wiring in the residential houses/duplexes, there is no element of any construction of a commercial/residential complex as defined under the provisions of the Service Tax Act. Accordingly, demand of ₹ 5,88,991/-, is also set aside - for work done for Indian Railway Welfare Organization, in view of the fact that the work had been completed before 30-10-2004, there is no question of levy of any tax for the same under ECIS, which have become taxable with effect from 01-06-2005 - there is no element of suppression, fraud or any mala-fide on the part of the appellant and they have not concealed information or made any misstatement of facts before the Revenue. At the very first instance, the proprietor of the appellant has deposited the admitted tax liability and the issue being wholly interpretational, extended period of limitation is not attracted - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Service Tax demand for the extended period from October 2005 to September 2010.
2. Imposition of penalties under various sections of the Finance Act.
3. Dispute regarding the taxable nature of services provided by the appellant.
4. Lack of specific details in the Show Cause Notice leading to vagueness in the demand.

Analysis:

Issue 1: Service Tax Demand
The appellant, a contractor, appealed against the Order-in-Appeal confirming a Service Tax demand of ?24,92,001 for the period from October 2005 to September 2010. The demand was related to various services provided by the appellant, including Erection, Commissioning & Installation Service, works contract service, Renting of Immoveable Property, and Construction of Residential Complex Service. The appellant contested the demand, arguing that their activities were not liable to Service Tax as per their interpretation of the relevant circulars and the nature of their work.

Issue 2: Imposition of Penalties
Penalties were imposed on the appellant under Sections 68, 69, and 70 of the Finance Act, along with penalties under Section 78 of the Act and interest. The appellant disputed the penalties, claiming that there was no suppression of facts on their part and that they had disclosed their turnover properly. The appellant also argued that the extended period of limitation should not apply in their case.

Issue 3: Dispute over Taxable Services
The appellant contended that certain services provided by them, such as laying cables under or alongside roads and internal/external electrification, were not taxable under the Erection, Commissioning & Installation Service category. They relied on circulars to support their argument and presented specific details of the work done for different organizations to demonstrate the non-taxable nature of their services. The appellate authority set aside certain portions of the demand based on these arguments.

Issue 4: Lack of Specific Details in Show Cause Notice
The appellant raised concerns about the vagueness of the Show Cause Notice, stating that it did not provide a clear breakdown of the demand year-wise and category-wise. This lack of specificity was considered by the appellate authority in setting aside portions of the demand related to specific services where the taxable nature was disputed.

In conclusion, the appellate authority allowed the appeal, setting aside portions of the Service Tax demand and penalties imposed on the appellant. The decision was based on the lack of clarity in the Show Cause Notice, the interpretation of relevant circulars, and the nature of services provided by the appellant.