2018 (2) TMI 837 - AT - Service Tax

Works Contract Service - composite contract - erection, commissioning or installation service - Held that - the type of services rendered by the appellant has been clearly brought out by the adjudicating authority. He has recorded the finding that the services are in the nature of composite contracts which involve supply of material and rendering of services. Such contracts are rightly classifiable under works contract services which was included in the statute from 1.6.2007 - Hon ble Supreme Court in the case of L & T Ltd. 2015 (8) TMI 749 (SC) has held that composite work contract will be leviable to service tax only from the date of introduction of such services i.e. 1.6.2007 when Section 65 (105)(zzzza) was introduced. Appeal dismissed - decided against Revenue.

Summary

Issues:
Nature of services provided to Airport Authority of India, classification of services under works contract, demand of service tax for the period before and after 1.6.2007.

Analysis:
The appeal was filed against Order-in-Original No.22/2013 dated 27.6.2013, concerning services provided to the Airport Authority of India. The dispute revolved around the classification of services provided by the respondent before and after 1.6.2007, when works contract service was introduced. The department contended that the services were composite works contracts involving supply of material and services, thus falling under the category of works contract services. The adjudicating authority upheld this classification and levied service tax from 1.6.2007 onwards, while dropping the demand for the period before this date categorized under erection, commissioning, or installation services.

The Revenue, dissatisfied with the dropping of demand for the period before 1.6.2007, filed the present appeal. The argument put forth was that service tax should have been demanded for the period up to 1.6.2007 under the category of services mentioned in the show cause notice. After hearing both sides and examining the evidence, the Tribunal noted that the services provided by the appellant were indeed composite contracts involving both material supply and service provision. These contracts were correctly classified under works contract services, as introduced in the statute from 1.6.2007. Citing the Supreme Court's decision in L & T Ltd. case, it was established that composite work contracts are liable for service tax only from the date of introduction of such services, i.e., 1.6.2007, and not under any other category prior to this date.

Consequently, the Tribunal found no merit in the Revenue's appeal and rejected it, upholding the impugned order that dropped the service tax demand for the period before 1.6.2007. The decision was made in accordance with the pronouncement of the Apex Court and the applicable legal provisions.