2017 (4) TMI 802 - AT - Service Tax

Works contract - claim of assessee is that The entire work was completed on 4-4-2007. The service tax came into existence on the residential services w.e.f. 1-6-2007, therefore service not taxable - Held that - when the entire cause of action was completed in the month of April, 2005 then the service tax on the works contract is not leviable which came into existence on 1-6-2007 - The BDA is Government agency so the genuineness of the bills and contract signed by and raised against BDA cannot be doubted - demand not sustainable - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against cancellation of service tax demand for construction of residential complex
- Interpretation of the period for service tax liability
- Genuineness of bills and contract with a government agency

Analysis:
The judgment pertains to an appeal against the cancellation of a service tax demand for the construction of a residential complex. The appellant was engaged in providing taxable services falling under the category of Construction of Complex (Residential) services under the Finance Act, 2005. The dispute arose as the service tax demand was made for the period 2005-06 to 2007-08, but the entire work was completed in April 2005, before the service tax on residential services came into effect on June 1, 2007. The Commissioner (Appeals) had canceled the demand based on this timeline discrepancy, leading to the appeal by the Revenue.

During the proceedings, the appellant submitted documents such as the statement of work order and appeal invoices executed in April 2005 against the Bhopal Development Authority, a government agency. The genuineness of these documents and the contracts signed with the government agency were not in question. The Tribunal noted that since the entire cause of action was completed in April 2005, before the service tax on works contracts became leviable from June 1, 2007, there was no basis for imposing the service tax retrospectively. Consequently, the Tribunal upheld the Commissioner's order on different grounds, emphasizing that the service tax liability did not arise during the relevant period. As a result, the appeal filed by the department was dismissed, affirming the decision of the Commissioner (Appeals).

In conclusion, the Tribunal's decision focused on the timeline of the completion of the construction work in relation to the introduction of service tax on residential services, ultimately leading to the dismissal of the appeal against the cancellation of the service tax demand. The genuineness of the documents submitted by the appellant and the nature of the contract with a government agency played a crucial role in establishing the timeline and determining the applicability of service tax liability.