2017 (5) TMI 955 - AT - Service Tax

Erection, commissioning or installation - the appellant had undertaken various types of works including supply and installation/testing and commissioning of various electrical equipments/street lightings, poles etc. and all these types of work were covered by single work order - demand of tax with interest - Held that - It is clear that the said contracts fall under purview of taxable service of works contract . Since, the period involved in this case is prior to 01/06/2007 i.e. introduction of levy of service tax under works contract service , the activities undertaken by the appellant will not fall under such purview of taxable service for the purpose of levy of service tax - service tax demand for the period from 2005-2006 to 2006-2007 set aside holding that service tax was not leviable under the works contract service during such period - demand for subsequent period upheld. Since service tax on advances received for providing taxable services is required to be paid, which has not been paid within the stipulated time, interest on such delayed payment of tax is liable to be paid by the appellant - demand of interest upheld. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of service tax demand for the period 2005-2006 to 2006-2007 under the category of "erection, commissioning or installation" services.
2. Confirmation of interest on non-payment of service tax on advances within the stipulated time period.

Analysis:
1. The appeal challenged an order confirming service tax demand for the period 2005-2006 to 2006-2007, categorizing the services provided by the appellant as "erection, commissioning or installation" services. The Commissioner (Appeals) upheld the demand based on the predominance of installation/testing and commissioning activities over the supply of goods in the contracts. However, it was noted that the contracts involved a composite nature of work, including both supply of goods and installation/commissioning. The Tribunal observed that since the activities predated the introduction of service tax under "works contract service," they did not fall under the taxable service for levy of service tax, citing the Supreme Court's decision in CCE & Cus., Kerala vs. Larsen & Toubro Ltd. (2015).

2. The Tribunal also addressed the issue of interest on delayed payment of service tax on advances for taxable services. It was determined that the appellant was liable to pay interest on the delayed payment of tax, as required by law. The Tribunal found no fault in the imposition of interest on the delayed payment of service tax.

In conclusion, the Tribunal set aside the impugned order confirming the service tax demand for the period in question, ruling in favor of the appellant. It was held that service tax was not leviable under the works contract service during the specified period. The appeal was allowed, and the decision was pronounced in open court on 30/03/2017.