2017 (5) TMI 701 - AT - Service Tax

Scope of SCN - case of appellant is that the impugned order has travelled beyond the scope of show cause notice inasmuch as the proposal in the show casue notice was to classify the services under ECI service, whereas the impugned order has confirmed the demand under the category of commissioning and installation service, construction service and works contract service - Held that - the law is well settled that the impugned order is not maintainable, when the same travelled beyond the scope of SCN. Since the activities undertaken by the assessee involves both supply of goods as well as provision of labour service, the same cannot be classifiable under the errection, commissioning or installation service. Further, since the contracts executed by the assessee were composite in nature, involving both supply of material as well as provision of labour, the same is not leviable to works contract tax prior to 01.06.2007. Appeal allowed - decided in favor of assessee.

Summary

Issues:
Classification of services under ECI services, commissioning and installation services, construction service, and works contract service.

Analysis:
The case involved a contractor engaged by petroleum companies for constructing petrol pumps, with contracts being composite in nature involving material supply and labor provision. The Department sought to confirm service tax demand under various categories. The impugned order classified services differently from the show cause notice, which the assessee contested as beyond the notice's scope. The law dictates that an order exceeding the show cause notice's scope is not maintainable. The adjudicating authority found the services classifiable under works contract service from a specific date, noting the composite nature of the contracts involving both material supply and labor provision. Consequently, the services were not liable for works contract tax before a certain date. The Tribunal upheld the assessee's appeal, allowing it, and dismissed the Revenue's appeal.

This judgment highlights the importance of adherence to the scope of show cause notices in tax matters. It emphasizes the need for consistency between the notice and the final order to ensure fairness and legality in tax assessments. The decision also underscores the significance of correctly classifying services based on their nature and components, especially in composite contracts involving both material supply and labor provision. The Tribunal's ruling serves as a reminder of the legal principles governing tax classifications and the implications of exceeding the scope of initial notices in tax dispute resolutions.