2018 (5) TMI 721 - AT - Service Tax

Classification of services - appellant has provided the construction service as well as supply of goods for execution of such service - whether commercial or industrial construction service or works contract service? - Held that - as per the judgment of Hon ble Supreme Court in the case of Commissioner of Central Excise, Kerala vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT , composite contract should be considered as works contract and to be taxed only with effect from 01.06.2007 - the CICS involving the composite contract, should be taxed under the works contract service. Non-payment of service tax - services provided to SEZ - Held that - the issue is no more res-integra, in view of the decision of this Tribunal in the case of Reliance Ports and Terminals Ltd. vs. Commissioner of CE & ST, Rajkot 2013 (10) TMI 339 - CESTAT AHMEDABAD , wherein by interpreting the provisions contained in Section 26 (1) (e) and Section 51 of the SEZ Act, 2005, this Tribunal has held that services provided to SEZ Unit/developer should not be subjected to any Service Tax in respect of the services provided to them. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against the order passed by the Commissioner of Service Tax, New Delhi
- Taxability of services provided by the appellant
- Availment of Notification No. 1/2006, Notification No. 9/2009, and Notification No. 15/2009
- Exemption under Notification No. 4/04 for services provided to SEZ unit/developer

Analysis:
The case involved an appeal by the Revenue against an order passed by the Commissioner of Service Tax, New Delhi. The appellant provided services under various categories like commercial or industrial construction service, works contract service, and others, registered with the Service Tax Department. The Department alleged underpayment of Service Tax and incorrect benefit availed under certain notifications. Show cause proceedings were initiated, leading to the impugned order where the proposed demands were dropped by the adjudicating authority.

The Revenue contended that the services provided by the appellant should be limited to commercial or industrial construction service and not works contract service. However, the Tribunal found that the appellant had provided both construction services and supplied goods for their execution. Citing a judgment of the Hon'ble Supreme Court, a composite contract should be considered a works contract and taxed accordingly. The Tribunal upheld the impugned order's findings based on the bifurcation of taxable services and goods sales provided by the appellant.

Regarding the exemption Notification No. 4/04, the Tribunal noted that the appellant did not collect Service Tax from the service receiver who was an SEZ unit/developer. Referring to a previous Tribunal decision, it was established that services provided to SEZ units should not be subjected to Service Tax. The Tribunal emphasized the provisions of the SEZ Act and related notifications supporting the exemption for services to SEZ units.

Conclusively, the Tribunal found no merit in the Revenue's appeal and upheld the impugned order passed by the adjudicating authority. The appeal filed by the Revenue was dismissed, and the decision was pronounced in the open court.