2018 (4) TMI 1181 - AT - Service Tax

Commercial and industrial construction service - Non-payment of service tax - period involved is from 10.09.2004 to 31.3.2007 - Held that - the issue being a works contract whether subject to service tax prior to 1.6.2007 has been settled by the judgment of the Hon ble Supreme Court in the case of Commissioner Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT - demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is liable to pay service tax for rendering commercial and industrial construction services from 10.9.2004 to 31.3.2007, and if penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994 are justified.

Analysis:

Issue 1: Liability to pay service tax for the period from 10.9.2004 to 31.3.2007
The appellant was engaged in constructing foundation bases for towers and buildings of BSNL. The case revolved around whether the services provided by the appellant were subject to service tax prior to 1.6.2007. The Tribunal referred to the judgment of the Hon’ble Supreme Court in the case of Commissioner Vs. Larsen & Toubro Ltd. - 2015 (39) STR 390 (SC), which clarified the taxability of works contracts. Additionally, the Tribunal cited a similar case where the demand for service tax was set aside based on the Supreme Court's judgment. Considering these precedents, the Tribunal held that the demand for service tax from the appellant for the mentioned period was unsustainable.

Issue 2: Imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994
The adjudicating authority had imposed penalties under sections 76, 77, and 78 of the Finance Act, 1994. However, since the Tribunal found the demand for service tax to be unsustainable based on legal precedents, it followed that the penalties imposed were also not justified. Therefore, the Tribunal set aside the impugned order and allowed the appeal, providing for consequential reliefs if any.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the demand for service tax and the penalties imposed were unsustainable. The judgment was based on legal precedents and interpretations regarding the taxability of works contracts prior to 1.6.2007.