2018 (3) TMI 698 - AT - Service Tax

Classification of service - works contract service or Commercial and Industrial Construction service? - case of appellant is that the work undertaken by them comes under Works Contract, which came into existence only w.e.f. 01/06/2007 - Held that - Admittedly, it was the assessee himself who took a plea that the services being provided by them fell under the category of Works Contract and as such the demand for the period prior to 01.06.2007 would not arise - The appellant cannot be allowed to have two different grounds for the purposes of challenging the demands pre and post 01.06.2007. The relief having been granted to them for the period prior to 01.06.2007. it has to be held that the services being provided by them for the entire period fell under the category of Works contract, in which case the confirmation of demand by Commissioner (Appeals) cannot be faulted upon. Penalty - Held that - the issue was a genuine issue of legal interpretation, which was the subject matter of litigation before various forums - penalty cannot be imposed. Appeal allowed in part.

Summary

Issues:
1. Classification of services under Commercial and Industrial Construction vs. Works Contract
2. Appeal against demands raised for different periods
3. Imposition of penalty on the assessee
4. Revenue's appeal against demands set aside for a specific period

Classification of services under Commercial and Industrial Construction vs. Works Contract:
The judgment involved appeals by both the assessee and the Revenue regarding demands raised under Commercial and Industrial Construction services, contested by the assessee as Works Contract. The Commissioner (Appeals) accepted the assessee's stance for the period before 01.06.2007 but confirmed it as Works Contract for the subsequent period. The assessee challenged the confirmation, arguing the original demands were under a different category. The Tribunal dismissed the contention, noting the assessee's initial plea for Works Contract, accepted by the Commissioner. The Tribunal held that since relief was granted for the period before 01.06.2007, the services provided by the assessee for the entire duration fell under Works Contract, justifying the confirmation of demand.

Imposition of penalty on the assessee:
Regarding the penalty, the Tribunal recognized the issue as a genuine legal interpretation matter, subject to litigation across forums. Referring to a previous Tribunal decision against the appellant, later reversed by the Supreme Court, the Tribunal concluded the disputed issue was not free from doubt. Consequently, the penalties imposed on the assessee were set aside by the Tribunal.

Revenue's appeal against demands set aside for a specific period:
The Revenue's appeal contested the Commissioner (Appeals) setting aside demands before 01.06.2007. The Tribunal observed a Supreme Court decision in a similar case favored the assessee, indicating no merit in the Revenue's appeal. Consequently, the Tribunal rejected the Revenue's appeal, affirming the decision to set aside demands for the specific period.

In summary, the Tribunal upheld the classification of services as Works Contract, set aside penalties imposed on the assessee due to legal interpretation uncertainties, and rejected the Revenue's appeal against demands set aside for a specific period based on a Supreme Court precedent.