2018 (4) TMI 775 - AT - Service Tax

Constructions Services - Commercial or Industrial Construction Services - non-payment of service tax - Held that - the classification of services during the period has remained under confusion. Further the question being of law can be raised at any stage and therefore the reasoning adopted by the Appellate Authority to deny the claim of the Appellant is erroneous. It is not appearing either from the adjudication order and the Appellate order as to why the Appellants are not eligible for exemption in case of services rendered to M/s MSETCL. The Appellant is not liable for service tax in respect of services given to MSETCL - Demand set aside. Marvellous Metals and other services - whether in the nature of works contract service or otherwise? - Held that - if the services are in the nature of Works Contract, the same shall not be liable for service tax before 01.06.2007 - matter remanded for reconsideration. Appeal allowed in part and part matter on remand.

Summary

Issues involved: Non-payment of service tax on construction activities, classification of services as Works Contract, applicability of exemptions, imposition of penalties.

Analysis:
The appeal dealt with the issue of non-payment of service tax on construction activities carried out by the Appellant for various entities. The adjudicating authority confirmed the demand for service tax and imposed penalties, which was partially modified by the Appellate Commissioner. The Appellant contended that their services should be classified as Works Contract and argued for exemptions based on the nature of services provided to the Maharashtra State Electricity Board. The Appellate authority upheld the demands and penalties, leading to the present appeal.

The Appellant's representatives argued that the services should be considered as Works Contract, even though this plea was raised for the first time before the Appellate Authority. They also claimed that services provided to the Maharashtra State Electricity Board were related to power transmission and thus exempt from service tax under a specific notification. On the other hand, the revenue authority reiterated the findings of the impugned order and stated that the Appellant did not challenge the classification of services earlier, preventing them from disputing it at the Tribunal stage.

Upon reviewing the submissions, the Tribunal found that the Appellants' classification of services as Works Contract could be raised at any stage as it involved a question of law. The Tribunal also noted the confusion surrounding the classification of services during the relevant period. Additionally, the Tribunal highlighted that the Appellants might be eligible for exemption concerning services provided to the Maharashtra State Electricity Board based on a specific notification. Referring to a previous case, the Tribunal concluded that services rendered to the State Electricity Board might not be taxable.

Consequently, the Tribunal held that the Appellant was not liable for service tax on services provided to the Maharashtra State Electricity Transmission Company Ltd. The demand and penalties in this regard were set aside. Regarding services provided to another entity, the Tribunal directed a reconsideration by the adjudicating authority to determine if they qualify as Works Contract services and should be liable for service tax. The matter was remanded for further proceedings, and penalties were to be levied accordingly. The impugned order was modified, and the appeal was disposed of by way of remand.