2017 (12) TMI 450 - AT - Service Tax

Non-payment of service tax - Management Maintenance or Repair Service - Erection Commissioning and Installation Service - validity of SCN - Held that - We are not in the agreement with proposition that the appellants can be allowed to take advantage of their own action of non-cooperation with the revenue. In any case they have participated in proceedings before the Original Authority by submitting all the contract documents which resulted in the present impugned order. The objection regarding the split up figures not available in the notice cannot be taken to a level to set aside the proceedings themselves, considering the attitude of the appellant during the proceedings - No grievance or violation of principles natural justice would arise in the of the present case. Erection Commissioning and Installation Service - abatement - Held that - The Hon ble Supreme Court in the case of Larsen and Tubro Ltd. 2015 (8) TMI 749 - SUPREME COURT held that the composite contracts involving supply materials along with provisions of service are liable to Service Tax only w.e.f. 1/06/2007. The law laid down by the Hon ble Supreme Court has to be applied to various contracts which are now in dispute, wherever relevant. The appellants claimed that most of their contracts are relating to roads. However, we note that the contracts may be either relating to electrification of roads or other incidental miscellaneous work with reference to roads. The actual scope of each of the contract which are claimed to be road work by the appellant are to be examined for proper finding - Since we are inclined to remand the matter to the Original Authority in view of above analysis the question of limitation also can be examined by Original Authority for a fresh decision. Appeal allowed by way of remand.

Summary

Issues:
1. Validity of show cause notice and tax liability classification.
2. Cooperation of the appellant during the enquiry.
3. Merits of the case regarding tax liability under different categories.
4. Application of abatement in tax calculation.
5. Exemption under Finance Act, 2012 for certain services.
6. Limitation period for the demand made.

Issue 1 - Validity of show cause notice and tax liability classification:
The appellant challenged the show cause notice's specificity regarding tax liability classification and the subsequent proceedings' legality. The Original Authority confirmed a tax liability of ?86,27,170 and imposed penalties. The appellant argued that the classification of contracts for tax liability was erroneous and contracts taxed under Erection Commissioning and Installation Service should be treated as Works Contract Service. The Ld. Consultant contended that abatement under Notification No.1/2006 should apply to MMR services. The Tribunal noted the appellant's non-cooperation during the enquiry but upheld the Original Authority's decision, emphasizing that the appellant participated in the proceedings and submitted all contract details.

Issue 2 - Cooperation of the appellant during the enquiry:
The appellant was accused of non-cooperation with the department during the enquiry, leading to a lack of specific details in the show cause notice. The department issued a demand based on available documents. The appellant's argument that the notice should have been more specific was dismissed, stating that the appellant's non-cooperation resulted in the demand being made under two tax categories. The Tribunal held that the appellant cannot benefit from their lack of cooperation and that they participated in the proceedings before the Original Authority.

Issue 3 - Merits of the case regarding tax liability under different categories:
The Tribunal analyzed the tax liability under Erection Commissioning and Installation Service and MMR Service. Abatement was allowed for Erection Commissioning and Installation Service based on the supply of materials. The Tribunal referenced a Supreme Court decision regarding composite contracts liable to Service Tax. For MMR Service, the appellant argued that certain contracts should be exempt due to the Finance Act, 2012. The Tribunal noted the need for a detailed examination of each contract to determine tax liability accurately.

Issue 4 - Application of abatement in tax calculation:
The Tribunal acknowledged the abatement in taxable value for Erection Commissioning and Installation Service. It highlighted the Supreme Court's ruling on composite contracts involving material supply. The law was to be applied to disputed contracts where relevant.

Issue 5 - Exemption under Finance Act, 2012 for certain services:
The appellant contended that certain contracts should be exempt under the Finance Act, 2012, specifically for MMR Service related to roads. The Tribunal emphasized the necessity of a categorical finding on contracts eligible for exemption and abatement under Notification 12/2003.

Issue 6 - Limitation period for the demand made:
A part of the demand was beyond five years, deemed unsustainable. The Tribunal decided to remand the matter to the Original Authority for further examination, including the question of limitation, based on the analysis provided.

In conclusion, the Tribunal set aside the impugned order and remanded the matter back to the Original Authority for a fresh decision, considering the detailed analysis of the issues involved.