2018 (5) TMI 1359 - AT - Service Tax

Valuation - completion and finishing services - abatement - As per the Revenue, value of the material used by appellant is not separately indicated in various invoices and service tax was charged on the invoice value, after availing abatement of 67% to which the appellant are not entitled for abatement of 67% - Held that - it is not disputed that appellant is executing the works of finishing assigned to them along with material - in terms of the decision of Hon ble Apex Court in Larsen & Toubro Limited 2015 (8) TMI 749 - SUPREME COURT merits classification of the services rendered by the appellant under Works Contract services for prior period or the subsequent period. As the services of Works Contract became taxable with effect from 01.06.2007, therefore, the demands pertaining to prior to 01.06.2007 are not sustainable. For the period post 01.06.2007, as it is been held that services merit classification under Works Contract services and it is not disputed that appellant is providing services along with material, in that circumstance, the appellant is entitled for abatement of 67% of the value of taxable services and for remaining 33% value of the service, the appellant is paying service tax. Therefore, on the gross value of services provided by the appellant, are not taxable. Extended period of limitation - Held that - As on the same issue, earlier also the show cause notice was issued to the appellant for the prior period, in that circumstance, the SCN is barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of services under Works Contract
- Applicability of abatement on taxable services
- Demand for the period under extended limitation

Classification of services under Works Contract:
The appellant, a Decorator, provided various interior services on a contract basis. The Revenue alleged that the appellant should be classified under Commercial and Industrial Construction Services and demanded service tax on the gross value of services. The appellant argued that their activity falls under Works Contract and cited relevant case laws. The Tribunal held that the appellant's services merit classification under Works Contract services, especially post 01.06.2007, based on the decision in Larsen & Toubro Limited case. Consequently, demands for the period before 01.06.2007 were deemed unsustainable.

Applicability of abatement on taxable services:
Regarding the abatement issue, the appellant contended that they are entitled to a 67% abatement on the value of taxable services and are paying service tax on the remaining 33% value. The Tribunal agreed with the appellant, citing the Larsen & Toubro Limited case, and ruled that the gross value of services provided by the appellant is not taxable.

Demand for the period under extended limitation:
In one of the appeals, the demand was for the period from October 2007 to March 2009, with a show cause notice issued invoking the extended period of limitation. The appellant argued that a similar notice was issued for the prior period, making the current notice time-barred as per the decision in Nizam Sugar Factory case. The Tribunal concurred with the appellant, holding that the demand based on the extended limitation period was not sustainable. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief.