2018 (2) TMI 1616 - AT - Service Tax

Works contract - benefit of N/N. 1/2006-ST dt. 1.3.2006 - denial on the ground that the documents have not be produced - Held that - The appellant have produced all the documents in respect of all the parties before Tribunal. A perusal of the said documents shows that many of these are inclusive of the material and therefore are in the nature of works contract in many of the invoices produced VAT has been paid. In these circumstances, the claim of the appellant that the value of the material is included in the contract prices is correct. The impugned order which essentially confirms on demand on the ground that appellants have not failed to produce the evidence, is set aside - matter remanded to the original authority for fresh adjudication - appeal allowed by way of remand.

Summary

Issues:
1. Confirmation of demand of service tax, interest, and penalty under Sections 76, 77, and 78 of the Finance Act.
2. Claim of exemption under Notification No.1/2006-ST for construction activities.
3. Disregard of claim regarding non-commercial nature of projects.
4. Disregard of claim that activities were works contract.
5. Denial of benefit of Notification No.1/06 due to lack of supporting documents.

Analysis:
1. The appellant, engaged in construction works, challenged the demand of service tax, interest, and penalties imposed under the Finance Act. They argued that certain projects were non-commercial or residential, while others were commercial works. They claimed the benefit of Notification No.1/2006-ST for projects involving material costs. The appellant also contended that some activities were works contracts. The respondent upheld the demand.

2. The appellant's counsel highlighted that the denial of the benefit under Notification No.1/06 was due to the lack of submitted works orders or invoices supporting their claim for material costs. The claim regarding non-commercial projects was dismissed for insufficient evidence. Additionally, the assertion that all activities were works contracts was rejected for not providing proof of VAT/Sales Tax payments.

3. Upon reviewing the submissions, the Tribunal found that the appellant had indeed produced documents supporting their claims. Many invoices included material costs, indicating works contract nature. VAT payments were also evident in some invoices. The Tribunal concluded that each contract entry needed individual examination to determine tax liability accurately. As the documents supported the inclusion of material costs, the appellant's claim for exemption under Notification No.1/06 was upheld. The impugned order was set aside, and the matter was remanded to the original authority for fresh adjudication on the issues raised.

4. Ultimately, the appeal was allowed by way of remand for further proceedings as per the Tribunal's findings. The judgment was pronounced on 31/01/2018 by the Tribunal members.