2017 (4) TMI 562 - AT - Service Tax

Construction and commissioning of petrol pumps for oil companies - denial of abatement - eligibility for abatement of 67% in the taxable value for services rendered under commercial or industrial construction service - Held that - Admittedly, all the contracts executed by the appellant/assessee are in the nature of indivisible works contract. They were registered with the State VAT Authorities under the said category. The Hon ble Supreme Court in Larsen & Toubro Ltd. (2015 (8) TMI 749 - SUPREME COURT) held that such works contracts are liable to service tax only w.e.f. 01/06/2007. Accordingly, following the ratio of the Hon ble Supreme Court in Larsen & Toubro Ltd. (2015 (8) TMI 749 - SUPREME COURT), we find that there is no merit in the appeal filed by the Revenue regarding re-classification of the service or for denial of abatement to the appellant/assessee. - Demand set aside - Decided in favor of assessee.

Summary

Issues:
- Appeal against impugned order dated 24/03/2011 of Commissioner of Central Excise, Jaipur.
- Dispute over service tax under "commercial or industrial construction service" and "erection, commissioning or installation service" from 01/03/2003 to 31/03/2008.
- Denial of abatement of 67% in taxable value due to free supply items.
- Classification of contracts as indivisible works contracts liable to service tax from 01/06/2007.
- Appeal by Revenue against classification of services rendered by the appellant/assessee.

Analysis:
1. The appeals were made against the Commissioner's order regarding service tax issues. The appellant/assessee, engaged in construction and commissioning of petrol pumps, was held liable for service tax and penalties. The appellant contested the denial of abatement in taxable value due to free supply items provided by oil companies for the work.

2. The appellant argued that free supply items should not be included in the gross value for abatement, citing precedents like Bhayana Builders Pvt. Ltd. vs. CST, Delhi. The appellant also contended that contracts involving goods subject to VAT are liable to service tax only from 01/06/2007, based on the Supreme Court's decision in CCE & CUS, Kerala vs. Larsen & Toubro Ltd.

3. The Tribunal found that the denial of abatement solely based on non-inclusion of free supply items was not valid. Relying on previous decisions, the Tribunal held that the appellant's entitlement for abatement cannot be denied. The issue of classification was not delved into, but the appellant's right to abatement was upheld.

4. The Revenue's appeal against the classification of services was deemed irrelevant as all contracts were considered indivisible works contracts, subject to service tax only from 01/06/2007 as per the Supreme Court's ruling. The Tribunal dismissed the Revenue's appeal and allowed the appellant's appeal, citing the applicable legal principles and precedents.

5. In conclusion, the Tribunal dismissed the Revenue's appeal and allowed the appellant's appeal, emphasizing the correct application of abatement rules and the timing of service tax liability on indivisible works contracts. The decision was made based on legal interpretations and precedents cited during the proceedings.