2017 (8) TMI 520 - AT - Service Tax

Works Contract Service - jurisdiction to adjudicate SCN - unregistered assessee - Held that - at the time of the execution of work, the appellant was not registered with the Central Excise/Service tax department. In that circumstance, the jurisdiction falls where the appellant has executed the work. Admittedly, in this case, the work has been executed at Chandigarh, therefore, the cause of action arose at Chandigarh and the Commissioner of Central Excise, Chandigarh-II has no jurisdiction for the work executed at Chandigarh. In that circumstance, the adjudicating authority has no jurisdiction to adjudicate the impugned SCN. Therefore, the impugned order is not sustainable in the eyes of law. Demand u/s 73 and section 73A of the Act - Held that - The provisions of section 73A of the Act are applicable where the amount of service tax has been collected and retained by the assessee - As no separate amount has been collected by the appellant, no service tax is payable under section 73A of the Act by appellant. Therefore, section 73A of the Act is not invokable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax, interest, and penalty for construction of residential and commercial complexes under work contract service.

Analysis:
1. Jurisdictional Issue:
The appellant contested the jurisdiction of the adjudicating authority, arguing that the work was executed in Chandigarh under the jurisdiction of a different Commissioner. The Tribunal held that jurisdiction is based on the location of service execution, concluding that the impugned order lacked legal sustainability due to jurisdictional discrepancies.

2. Tax Liability for Construction Services:
The appellant asserted that since the constructed houses were leased, not sold, no service tax liability existed. Citing precedents, the Tribunal agreed that construction for personal use, including leasing, does not attract service tax liability, thus supporting the appellant's position.

3. Extended Period of Limitation:
Regarding the invocation of the extended limitation period, the Tribunal found the issue debatable, rendering the extended period inapplicable in this case due to the genuine confusion surrounding the liability for service tax.

4. Demand under Section 73A:
The Tribunal noted confusion in the demand raised under both sections 73 and 73A, indicating uncertainty on the amount collected and retained by the appellant. Relying on legal precedents, the Tribunal concluded that no separate amount collected by the appellant warranted the inapplicability of section 73A, thus setting aside the demand under this section.

5. Penalty Imposition:
Lastly, the appellant argued against the imposition of penalties. The Tribunal did not address this specific issue separately in the judgment but allowed the appeal with consequential relief, indicating a favorable decision for the appellant.

In summary, the Tribunal ruled in favor of the appellant, setting aside the impugned order due to jurisdictional issues, confirming no service tax liability for leased constructions, rejecting the demand under section 73A, and allowing the appeal with consequential relief.