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2017 (12) TMI 1503 - AT - Service TaxLevy of service tax - composite works contract - whether the service tax can be levied on indiisible Works Contract Service(WCS) prior to 01/06/2007 i.e. the date of introduction of WCS under Section 65(105)(zzzza) of the Act? - Held that - issue is no more res integra and has been settled by the Hon ble Supreme Court in the case of L&T Ltd. 2015 (8) TMI 749 - SUPREME COURT wherein the Hon ble apex court has held that prior to 01/062007, there was no charging section to specifically levy service tax on WCS, or mechanism to tax service tax element derived from gross amount charged for works contract less value of the property in goods transferred in execution of works contract. This Tribunal in the appellant s own case, ABB LTD. Versus COMMISSIONER OF SERVICE TAX, BANGALORE 2010 (7) TMI 335 - CESTAT, BANGALORE has allowed the appeal of the appellant by discussing all the sub-contracts in the main contract which form part of the composite contract. Appeal allowed - decided in favor of appellant.
Issues:
1. Whether service tax can be levied on indivisible Works Contract Service (WCS) prior to 01/06/2007? 2. Whether the imposition of penalties and interest under Sections 75, 76, and 78 is justified? 3. Whether the invocation of the extended period under Section 73 of the Act is correct? Analysis: Issue 1: The case involved appeals against impugned orders concerning service tax demands on works contracts. The appellant argued that the service tax on indivisible WCS prior to 01/06/2007 was not valid. They cited the Supreme Court's decision in CCE&C, Kerala & Others Vs. Larsen and Toubro Ltd., which clarified that prior to 01/06/2007, service tax could only be levied on service contracts simpliciter, not on composite indivisible works contracts. The appellant contended that their activities fell under composite WCS, introduced in the tax net only from 01/06/2007. They also referenced various judgments and circulars to support their position. The Tribunal agreed with the appellant, relying on the Supreme Court's decision in the Larsen and Toubro case, and set aside the impugned orders, allowing the appeals with consequential relief. Issue 2: The Department sought to enhance the penalties imposed on the assessee in one of the appeals. However, the Tribunal found that the impugned orders were not sustainable in law based on the Supreme Court's decision in the Larsen and Toubro case. As a result, the Tribunal set aside the impugned orders in all three appeals, allowing the assessee's appeals and dismissing the Department's appeal. Issue 3: Regarding the invocation of the extended period under Section 73 of the Act, the appellant argued that it was incorrect and against the law, as they had been filing returns and disclosing all material facts without suppression. The Tribunal did not delve into this issue explicitly in the judgment but focused on the main issue of service tax on indivisible WCS. In conclusion, the Tribunal ruled in favor of the assessee, holding that the impugned orders were not sustainable in law due to the Supreme Court's decision on the taxation of works contracts. The Tribunal set aside the orders, allowed the assessee's appeals, and dismissed the Department's appeal.
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