2017 (9) TMI 792 - AT - Service Tax

Classification of services - Works Contract Service - composition scheme - whether the service provided during the period 01.04.2005 to 31.10.2008 would fall under the category of Erection, Commissioning and Installation Services or under Commercial or Industrial Construction Service? - Held that - The Hon ble Supreme Court of India in case of Commissioner of C.Ex. & Cus. Kerala Vs Larsen & Toubro Ltd, 2015 (8) TMI 749 - SUPREME COURT has categorically held that services which involve rendering of service as well as supply of material involved in such work were to be classified only under the works contract service w.e.f. 01.06.2007 when such services were included in the statute. It has further been hold that by the Apex Court that such services cannot be classified under any other category prior to 01.06.2007. The demand for the period upto 31.05.2007 set aside and the demand amounting to ₹ 3,17,863/- for the period from 01.06.2007 upheld - appellant will also be liable to pay interest in terms of Section 75 - penalties set aside - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Classification of services for the period prior to 01.06.2007 under different categories and the applicability of service tax.

Analysis:
The appeal in this case was made against Order-in-Original No.66/2011 dated 23.11.2011, where the appellant, engaged in providing services related to petrol pumps, was demanded service tax by the Department. The adjudicating authority classified the services under works contract service from 01.06.2007 and demanded service tax accordingly. However, for the period before 01.06.2007, the services were classified partially under Commercial or Industrial Construction Service and partially under Erection Commissioning and Installation Service.

The Tribunal referred to the decision of the Hon'ble Supreme Court in the case of Commissioner of C.Ex. & Cus. Kerala Vs Larsen & Toubro Ltd, 2015(39) S.T.R. 913 (S.C), which held that services involving both rendering service and supplying material should be classified under works contract service from 01.06.2007 onwards. The Apex Court also stated that such services cannot be classified under any other category before this date.

Based on the Supreme Court's ruling, the Tribunal set aside the demand for the period up to 31.05.2007 and upheld the demand for service tax amounting to &8377; 3,17,863/- for the period from 01.06.2007. The appellant was also directed to pay interest as per Section 75. However, the penalties imposed on the appellant under Section 80 of the Finance Act, 1994, were revoked considering that the classification of services under works contract service was conclusively determined only after the Supreme Court's decision in the Larsen & Toubro case.

The judgment was pronounced on 18.08.2017 by the Tribunal comprising Mr. S.K. Mohanty, Member (Judicial), and Mr. V. Padmanabhan, Member (Technical). The legal representatives present during the proceedings were Shri Alok Kothari, Advocate for the Appellant, and Ms. Neha Garg, DR for the Respondent.