2017 (11) TMI 615 - AT - Service Tax

Construction and erection activities in terms of contract entered into with oil companies - tax liability - the SCN made a general allegation for tax liability. It referred to two different tax entries but with no separate demand - Held that - as per the law laid down by the Hon ble Supreme Court in Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT no service tax liability will arise in respect of composite works contract prior to 01.06.2007 - it is necessary for the original authority to have a fresh look into the facts of the case and to apply the correct legal position for a fresh decision - appeal allowed by way of remand.

Summary

Issues:
1. Dispute over service tax liability for construction and erection activities.
2. Vagueness in show cause notice and demand for service tax.
3. Classification of services and imposition of tax liability.
4. Applicability of abatement in taxable value.
5. Composite nature of contracts and tax liability prior to 01.06.2007.

Analysis:
1. The appeal involved a dispute regarding the service tax liability of the appellant-assessee for construction and erection activities carried out under contracts with oil companies. The Revenue issued a show cause notice to recover service tax, leading to an impugned order confirming the tax liability under Installation and Commissioning Service and Commercial and Industrial Construction Service for specific periods.

2. The appellant-assessee challenged the order, arguing that the show cause notice was vague and failed to specify the exact service for which the tax was demanded. The appellant contended that the services provided were part of composite contracts involving both material supply and service provision. Citing legal precedent, the appellant asserted that no tax liability should arise for activities before 01.06.2007.

3. The Revenue defended the order, stating that the service nature was correctly classified and tax liability imposed. However, the Revenue contested the order's classification for different periods and raised concerns about the abatement calculation, claiming that the gross amount was not accurately considered due to free material supply in the contract execution.

4. Upon hearing both parties, the Tribunal noted discrepancies in the show cause notice and the order's confirmation of tax liability for the same activities under different headings for different periods. The Tribunal highlighted the composite nature of the contracts and the legal precedent exempting tax liability for composite works contracts before 01.06.2007. Additionally, the Tribunal emphasized the correct reckoning of gross value for abatement, referencing relevant judicial decisions not considered by the original authority.

5. Considering the arguments and legal principles, the Tribunal set aside the impugned order and remanded the matter to the original authority for a fresh examination of the tax liability. The appellant was granted an opportunity to present their case, and the Revenue's grievances were to be addressed. The appeals were allowed by way of remand, emphasizing the need for a fresh decision based on the correct legal position and factual assessment.