2017 (11) TMI 298 - AT - Service Tax

Works contract - erection, installation and commission of street lights - non-paymnet of service tax - The only defence of the appellant as regard the service of installation of street lights is that the service is related to the road therefore it is excluded from the taxable service under the head of works contract - Held that - the installation of street lights is totally an independent service which is nothing to do with the road construction, the street lights may or may not be required besides the road, therefore it is not related to construction of road. Accordingly the service of installation of street lights being an independent service clearly falls under works contract service and during the relevant period it was taxable - demand upheld. Time limitation - Held that - firstly appellant had not declared the transaction in their ST-3 return subsequently despite knowing the taxability of the said service, they have not come forward and informed to the department regarding the provision of service. In these circumstances there is a clear suppression of fact on the part of the appellant - extended period rightly invoked. As regard the claim of the appellant that certain services like laying of cable shifting of cable for the purpose of widening of road etc. a service tax demand of ₹ 8919/- is not sustainable - Held that - such service is not taxable as per the Board Circular No. 123/05/2010 dt. 24.5.2010 - demand set aside. Appeal allowed in part.

Summary

Issues:
1. Taxability of installation of street lights under works contract service.
2. Time limitation for raising demand.
3. Taxability of other services like laying of cables under road widening activities.

Analysis:

Issue 1: Taxability of installation of street lights under works contract service
The appellant entered into contracts for services like installation of electrical equipment and street lights. The appellant argued that the service of installing street lights is related to road construction and should not be taxable under works contract service. However, the tribunal disagreed, stating that the installation of street lights is an independent service not directly related to road construction, thus falling under works contract service and being taxable during the relevant period.

Issue 2: Time limitation for raising demand
The appellant claimed that the demand was time-barred as the department was aware of their activities due to a previous show cause notice. However, the tribunal found that for the subsequent period, the appellant did not disclose the installation of street lights in their returns, leading to a suppression of facts. As a result, the demand was upheld on both merit and limitation grounds.

Issue 3: Taxability of other services like laying of cables under road widening activities
The appellant contested the demand related to services like laying of cables under road widening activities, citing a Board Circular stating that such services are not taxable. The tribunal agreed with this argument, referring to the Board Circular, and set aside the demand related to these services. The tribunal upheld the demand for installation of street lights under works contract service but dropped the demand for other services based on the Circular.

In conclusion, the tribunal upheld the demand for service tax on the installation of street lights under works contract service, citing it as a taxable independent service. The tribunal also found the demand to be within the time limitation due to the appellant's failure to disclose the services in their returns. However, based on the Board Circular, the demand related to other services like laying of cables under road widening activities was set aside.