2018 (6) TMI 1152 - AT - Service Tax

Interior decoration services - the services in relation to planning, design and beautification of spaces - whether the services are covered by the definition of Interior Decoration Service ? - Held that - A similar issue had come up before this Tribunal in the case of Spandrel vs. CCE, Hyderabad/Kochi 2010 (5) TMI 299 - CESTAT, BANGALORE , wherein the appellants in that case were undertaking interior works such as pest control, demolition & dismantling, masonry work, wall preparation viz. cement, plaster, POP punning, flooring & cladding, works like wall paneling, false ceiling, interior furnishing, partitioning of Banks, Financial Institutions and other firms etc. The activities which had been undertaken, have now been specifically included. This would indicate that prior to 16-6-2005, these were not included in the category of interior decorator service - In the instant case, the respondents had approached the Department for registration under Interior Decoration Service, but no action was taken by the Department on their application for registration under the said service. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Classification of services provided by the respondents.
2. Applicability of service tax under the category of "Interior Decoration Service."
3. Interpretation of the definition of "Interior Decoration Service."
4. Applicability of the extended period of demand invoking suppression.
5. Correct classification of the services under "Commercial or Industrial Construction Service."

Detailed Analysis:

1. Classification of Services Provided by the Respondents:
The respondents were registered for construction services and were alleged to have provided interior decoration services. The Revenue issued a show cause notice demanding service tax of ?82,92,214/- for the period October 2000 to 30.09.2005, along with interest and penalties under Sections 76 and 77 of the Finance Act, 1994. The Commissioner dropped all proceedings, leading to the Revenue's appeal.

2. Applicability of Service Tax under the Category of "Interior Decoration Service":
The Revenue argued that the services provided, including glazing, plastering, painting, flooring, and other related activities, fell under "Interior Decoration Service" as defined in the Finance Act, 1994. They relied on a clarification dated 07.10.1998 and the show cause notice to support their claim.

3. Interpretation of the Definition of "Interior Decoration Service":
The respondents contended that their services were not interior decoration but composite in nature, falling under "Works Contract Service" after 01/06/2007, as per the Supreme Court's decision in Larsen and Toubro Ltd. The Tribunal examined whether the activities were classifiable under "Interior Decoration Service" or "Commercial or Industrial Construction Service." It was found that the respondents executed work based on client specifications and designs, which did not involve advice, consultancy, or technical assistance, as required by the definition of "Interior Decoration Service."

4. Applicability of the Extended Period of Demand Invoking Suppression:
The Tribunal noted that the respondents had approached the Department for registration under "Interior Decoration Service," but no action was taken. The Commissioner found that the respondents' activities more appropriately fell under "Commercial Construction Services," which included finishing and completion activities. Consequently, the extended period of demand invoking suppression did not apply.

5. Correct Classification of the Services under "Commercial or Industrial Construction Service":
The Tribunal referred to previous judgments, including Spandrel vs. CCE, Hyderabad/Kochi, and CST, Mumbai vs. Indecor Slides, which held that activities such as false ceiling, partitions, flooring, and other similar works did not fall under "Interior Decoration Service." The Tribunal concluded that the respondents' activities were more appropriately classified under "Commercial or Industrial Construction Service" and upheld the Commissioner's order.

Conclusion:
The Tribunal found no infirmity in the adjudicating authority's order, agreeing that the respondents' services were correctly classified under "Commercial or Industrial Construction Service." The appeal filed by the Revenue was dismissed, and the order was pronounced in court on 22/5/2018.