2017 (6) TMI 429 - AT - Service Tax

Waiver of pre-deposit - Erection, Commissioning and Installation Services - the applicant entered into agreement with Haryana Urban Development Authority for execution of certain works wherein the material has been supplied by the appellant-applicant along with service - Held that - prima-facie the activity undertaken by the applicants does not fall under the category of Erection, Commissioning and Installation Services as they are providing the services along with the goods. In that circumstances, the proper classification of the said activities would be Works Contract service - the service tax demand has been confirmed under Erection, Commissioning and Installation Services which is not a proper classification - the applicant has made out a case for complete waiver of the pre-deposit - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of services under 'Erection, Commissioning and Installation Services' and 'Works Contract'; waiver of pre-deposit.

Analysis:
1. Classification of Services: The case involved a demand of &8377; 53,44,889/- against the appellant for services provided under the category of 'Erection, Commissioning and Installation Services'. The appellant had entered into an agreement with Haryana Urban Development Authority for certain works involving the supply of material and services. The Revenue contended that the services fell under 'Erection, Commissioning and Installation Services' and issued a show cause notice for service tax. The appellant sought waiver of pre-deposit, arguing that the services should be classified as 'Works Contract' based on a CBEC Circular and a Supreme Court decision.

2. Appellant's Argument: The appellant's consultant argued that the services should be classified as 'Works Contract' effective from 01.06.2007, not under 'Erection, Commissioning and Installation Services'. The consultant referred to CBEC Circular No. 123/5/2010-TRU and the Supreme Court decision in the case of Commissioner of Central Excise & Cus., Kerala vs. Larsen & Toubro Limited - 2015 (39) STR 913 (S.C.) to support this contention.

3. Revenue's Argument: The Revenue contended that the services provided by the appellant fell under 'Erection, Commissioning and Installation Services' and that the demand was confirmed only to that extent. The Revenue requested the appellant to make the pre-deposit based on this classification.

4. Tribunal's Decision: After considering both sides' submissions, the Tribunal found that the services provided by the appellant did not fit under 'Erection, Commissioning and Installation Services' as they involved both goods and services, indicating a 'Works Contract'. The Tribunal noted that the service tax demand was confirmed under the wrong classification. Therefore, the Tribunal granted a complete waiver of the pre-deposit for the entire amount of service tax, interest, and penalties. The recovery was stayed during the appeal's pendency, emphasizing the incorrect classification of services.

This detailed analysis of the judgment highlights the key issues of classification of services and the grant of waiver of pre-deposit, providing a comprehensive understanding of the legal reasoning and decision-making process involved in the case.