2017 (11) TMI 612 - AT - Service Tax

Construction of complex service - case of appellant is that service rendered by them are composite in nature involving supply of materials and provisions of service. Such composite contract are not liable to tax prior to 1.6.2007 - Held that - the submissions of the appellant are based on the nature of contract and also judicial pronouncements, many of them are after issue of the impugned order - we deem it fit and proper that these factual matters along with the law laid down by the Hon ble Supreme Court in the case of Commissioner, Central Excise & Customs Versus M/s Larsen & Toubro Ltd. and others 2015 (8) TMI 749 - SUPREME COURT requires examination by the original authority - appeal allowed by way of remand.

Summary

Issues:
Service tax liability on construction activity involving residential houses for various clients during a specific period. Applicability of amendments in tax entry related to construction of residential complex. Nature of composite contract involving supply of materials and provision of service. Consideration of judicial pronouncements post-impugned order. Demand on limitation period.

Analysis:
The appeal challenged an order by the Commissioner (Appeals), Bhopal, concerning service tax liability amounting to ?3,89,279 imposed on the appellants engaged in construction activity for residential houses from 16.6.2005 to 31.7.2006. Penalties under Sections 76, 77, and 78 were also levied. The appellant contended that a 2010 amendment subjected construction of residential complexes to tax only if amounts were received before the issuance of a completion certificate. Initially, they charged and paid service tax based on this. However, following a Board's Circular in 2006 shifting the tax liability to builders, they ceased charging service tax. The appellant argued that their services were composite, involving both materials and services, and cited a Supreme Court ruling (CCE Vs. L&T) to support their claim that such contracts were not taxable before 1.6.2007. They also contested the demand on the grounds of limitation.

The lower authorities had confirmed the tax liability without considering the nature of the contract or the legal principles cited by the appellant. The appellant's submissions were based on the contract's nature and recent judicial pronouncements, many of which post-dated the impugned order. The Tribunal found it necessary to examine these factual and legal aspects, particularly in light of the Supreme Court's decision in the L&T case. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original authority for a fresh decision, allowing the appellant the opportunity to present their case with supporting evidence. The appeal was allowed by way of remand, emphasizing the need for a reevaluation based on the additional legal and factual considerations presented.