2017 (10) TMI 443 - AT - Service Tax

Works contract - commercial or industrial construction service for the period from August 2004 to June 2007 - primary contention of the appellant is that they are project management consultants and are not provider of commercial or construction service - Held that - Without delving into the claim to be a project management consultant , we find that that such composite contract are works contract service that are taxable only with effect from 1st June 2007 as held by the Hon ble Supreme Court in Commissioner of Service Tax v. Larsen & Toubro Ltd 2015 (8) TMI 749 - SUPREME COURT - demand for the period prior to 1st June 2007 cannot survive - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Tax demand on consideration received as provider of 'commercial or industrial construction service'
2. Applicability of abatement on taxable value
3. Classification of services as 'project management consultants' or 'commercial or industrial construction service'
4. Tax liability under composite contracts prior to 1st June 2007

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI dealt with the appeal filed by M/s Alankar Real Estate Pvt Ltd against the order-in-appeal of the Commissioner of Customs, Central Excise & Service Tax. The dispute revolved around a demand of &8377; 32,92,937/- for providing 'commercial or industrial construction service' from August 2004 to June 2007, along with associated interest and penalties under sections 76, 77, and 78 of the Finance Act, 1994.

The primary contention of the appellant was that they should be classified as 'project management consultants' rather than providers of 'commercial or industrial construction service.' The first appellate authority had allowed abatement of 67% of the taxable value as per notification no.15/2004-ST. However, the original authority did not grant this abatement, leading to the tax demand being confirmed on the entire consideration in a composite contract involving goods and services.

The Appellate Tribunal, comprising Shri M V Ravindran and Shri C J Mathew, analyzed the case and referred to the Supreme Court judgment in Commissioner of Service Tax v. Larsen & Toubro Ltd [2015(39) STR 913 (SC)]. The Tribunal concluded that such composite contracts are 'works contract service' taxable only from 1st June 2007 onwards. Therefore, the demand for the period before 1st June 2007 was deemed unsustainable.

In light of the above analysis, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of M/s Alankar Real Estate Pvt Ltd. The judgment highlighted the importance of correctly classifying services and the applicability of tax liabilities under composite contracts, providing clarity on the tax treatment of such services before and after a specific date as per legal precedents.