2017 (7) TMI 599 - AT - Service Tax

Works contract service - taxability of the amounts received by appellant from Punjab Water Supply & Sewerage Board (PWSSB) for the work contracts for providing extension and augmentation of water supply, sewerage works with pumping stations, sewerage treatment plants and other works on turnkey basis in several places - Held that - the adjudicating authority should be given an opportunity to examine the entire issue in this case with reference to decision given by the Larger Bench of the Tribunal, in similar issue in the case of M/s. Lanco Infratech Ltd. And Others Versus Versus CC, CE & ST, Hyderabad 2015 (5) TMI 37 - CESTAT BANGALORE (LB) , where it was held that Where under an agreement, whether termed as works contract, turnkey or EPC, the principal contractor, in terms of the agreement with the employer/ contractee, assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/ contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act - matter remitted back to adjudicating authority reconsider the issue a fresh - appeal allowed by way of remand.

Summary

Issues Involved:
Stay petition for waiver of pre-deposit of service tax liability, taxability of amounts received for work contracts, interpretation of clauses under Explanation (ii) of Section 65(105)(zzzza), remand based on the decision of the Larger Bench of Tribunal.

Analysis:
The judgment pertains to a stay petition seeking a waiver of pre-deposit of service tax liability, interest, and penalties imposed by the adjudicating authority. The issue in question revolves around the taxability of amounts received by the appellant for work contracts related to water supply and sewerage works. The adjudicating authority categorized the appellant's activity as falling under work contract services, leading to a confirmed demand. However, referencing a similar issue addressed by the Larger Bench of the Tribunal, the appellants argued for a reconsideration based on the interpretation of relevant legal provisions.

The Tribunal examined the Larger Bench's decision, which clarified various issues related to the classification of services under different categories such as Commercial or Industrial Construction Service (CICS) and Works Contract Service (WCS). The Tribunal emphasized the need for a meticulous analysis of the case in light of the Larger Bench's decision. Consequently, the Tribunal refrained from expressing any opinion on the case's merits but remanded the matter back to the adjudicating authority for a fresh consideration. The adjudicating authority was instructed to review the issue with reference to the decision of the Larger Bench and ensure adherence to the principles of Natural Justice during the reconsideration process.

In conclusion, the Tribunal disposed of the stay petition and the appeal by remanding the case for further examination. The judgment underscores the significance of aligning the adjudication process with the legal interpretations provided by higher authorities to ensure a fair and just outcome. The remand serves as a procedural step to reassess the taxability issue concerning the appellant's work contracts in compliance with the legal principles elucidated by the Larger Bench of the Tribunal.