2018 (2) TMI 21 - AT - Service Tax

Abatement - Commercial or Industrial Construction Service - Works Contract Service - N/N. 1/2006-ST - Held that - It is not in dispute that the services were rendered prior to 01.06.2007. The show-cause notices pertaining to later periods have been issued, only because the receipts for the said services already completed by the appellants, were received after 01.06.2007 and the appellants reflected the receipts of the payments in their ST-3 returns - The issue whether Works Contract Services / Construction of Commercial or Industrial Construction Services are subject to levy of service tax prior to 01.06.2007 - demand set aside - appeal allowed.

Summary

Issues:
1. Eligibility for abatement under Notification No.1/2006-ST for construction services.
2. Applicability of service tax on services rendered before 01.06.2007 but payments received after that date.

Issue 1: Eligibility for abatement under Notification No.1/2006-ST:
The appellants, engaged in construction services, availed abatement under Notification No.1/2006-ST but were found to have also availed Cenvat credit, rendering them ineligible for the abatement. Show-cause notices were issued, leading to the demand of differential service tax, interest, and penalties. The authorities confirmed the demand, prompting the appellants to approach the Tribunal. The appellants argued that since the services were completed before 01.06.2007, they should be eligible for abatement. They cited the Apex Court's judgment in a similar case and a previous Tribunal decision supporting their stance. The Tribunal found that the services were indeed rendered before 01.06.2007, making the demands unsustainable. The impugned orders disallowing the abatement were set aside, and the appeals were allowed.

Issue 2: Applicability of service tax on services rendered before 01.06.2007:
The dispute arose as payments for services rendered before 01.06.2007 were received after that date, leading to show-cause notices. The appellants contended that as per the Apex Court's judgment, services completed before 01.06.2007 were not subject to service tax. They referenced a previous Tribunal decision supporting their argument. The Tribunal agreed with the appellants, stating that the demands were not sustainable based on the settled law. The Tribunal held that even though payments were received after 01.06.2007, they were not liable to service tax. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief as per law.