2017 (12) TMI 1311 - AT - Service Tax

Works contract - Erection, Commissioning and Installation services - composite work order for constructing petrol pumps, road work, pump installations, piping, soil work, etc. - Non-payment of service tax - Held that - the impugned order split up the single contract only based on the bill rates and the detailed invoices raised. Such bifurcation is not sustainable. The appellant carried out the composite work order though the bills are raised based on the completion of the work category-wise giving different account codes to various types of works. This by itself cannot be considered as different services provided to the clients. As such, the appellants shall be liable to service tax only under works contract service w.e.f. 1.6.2007. Abatement - Held that - the same requires verification with supporting data to be submitted by the appellant - matter on remand. The appellants shall be liable to service tax under works contract service w.e.f. 1.6.2007. The quantification of their liability shall be determined by the Original Authority after examining the supporting documents - appeal allowed in part by way of remand.

Summary

Issues:
1. Classification of services for service tax liability.
2. Applicability of abatement/composition under Notification no.15/2004-ST.
3. Waiver of penalties imposed under Section 76.
4. Liability for service tax under works contract service.
5. Verification of abatement/composition with supporting data.
6. Reference to a recent decision on penalty waiver.

Classification of services for service tax liability:
The case involved a dispute between the Revenue and the assessee regarding the classification of services for service tax liability. The Commissioner (Appeals) had split the services into two categories, namely "Erection, Commissioning and Installation" and "Commercial and Industrial Construction" services. However, the Tribunal held that the contracts for constructing petrol pumps should be taxed as works contract services only, starting from June 1, 2007. The Tribunal emphasized that the bifurcation made by the Commissioner based on bill rates was not sustainable, as the work carried out by the appellant was a composite work order and should not be considered as different services provided to clients.

Applicability of abatement/composition under Notification no.15/2004-ST:
The Revenue contested the extension of abatement under Notification no.15/2004-ST, arguing that the value of plant and machinery should be included in the gross value for calculating tax liability. The Tribunal noted that the abatement or composition claimed by the appellant needed verification with supporting data to be submitted. The decision referred to a recent Tribunal ruling where penalties imposed on the appellant were set aside by invoking Section 80 of the Finance Act.

Waiver of penalties imposed under Section 76:
The appellant had requested the waiver of penalties imposed under Section 76, citing similar cases where penalties were waived for service providers. The Tribunal agreed to waive the penalties in this case as well, in line with the provisions of Section 80 of the Act.

Liability for service tax under works contract service:
The Tribunal concluded that the appellants would be liable for service tax under works contract service from June 1, 2007. The quantification of their liability was to be determined by the Original Authority after examining supporting documents. The Tribunal highlighted that the tax liability on work contract services should be with abatements/composition available during the relevant period.

Verification of abatement/composition with supporting data:
The Tribunal emphasized the need for the appellant to provide supporting data for the abatement or composition claimed. The decision mentioned that penalties imposed were waived based on a recent Tribunal decision and in accordance with Section 80 of the Act.

Reference to a recent decision on penalty waiver:
The Tribunal referred to a recent decision in Final Order No.55921/2017 where penalties imposed on the appellant were set aside by invoking provisions of Section 80 of the Finance Act. This reference supported the waiver of penalties in the current case as well.

In conclusion, the Tribunal held that the appellants would be liable for service tax under works contract service from June 1, 2007, with the quantification of liability to be determined by the Original Authority. The abatement/composition claimed needed verification, penalties were waived under Section 80, and the demand was limited to the normal period under Section 73 of the Act. Both the appeals by Revenue and the assessee were disposed of accordingly.