2018 (7) TMI 1791 - AT - Service Tax

Erection commissioning and installation service or manufacture? - job of fabrication and erection of various steel structurals at site on and for behalf of their client - main argument of the appellant is that they are basically engaged in the manufacturing activities for the main contractor and as such their activity cannot be held to be a taxable service - Held that - The Tribunal on similar issue in the case of Neo Structo Construction Ltd. 2010 (3) TMI 252 - CESTAT AHMEDABAD concluded that such as activity would amount to manufacture and not rendering of any service at this stage - As the said decision was not before the Commissioner at the time of adjudication it is fit to set aside the impugned order and remand the matter for fresh decision in the light of the law declared in the above referred decision of the Tribunal. Revenue neutrality - Held that - As the main contractor has discharged the service tax liability on the gross value of the contract given to him and the present appellant is only a sub-contractor the entire exercise would be revenue neutral - as the matter is remanded the said fact would also be verified by the Commissioner. Time limitation - Held that - The appellant being an illiterate person and as such non-maintenance of records does not confer any malafide intention upon them so as to show that the appellant were not maintaining the records with a malafide intention not to pay service tax. In the absence of any positive activity and referring to such malafide on the part of the assessee invocation of longer period is prima facie not justified. Appeal allowed by way of remand.

Summary

Issues:
1. Confirmation of demand for taxable service of fabrication and erection of steel structurals.
2. Appellant's argument on engagement in manufacturing activities and reliance on a Tribunal decision.
3. Revenue's contention on separate services of fabrication and erection, liability for service tax, and limitation period.
4. Tribunal's decision on similar activity in a previous case and remand for fresh decision.
5. Revenue neutrality due to main contractor discharging service tax liability and verification needed.
6. Limitation aspect due to non-maintenance of records by the appellant.

The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved the confirmation of a demand amounting to around &8377; 1.68 Crores for the taxable service of fabrication and erection of steel structurals. The appellant argued that their engagement in manufacturing activities excluded them from being liable for a taxable service, citing a previous Tribunal decision. The Revenue contended that the appellant's activities fell under separate categories of fabrication and erection services, making them liable for service tax and invoking a longer limitation period due to non-maintenance of records. The Tribunal referred to a previous decision involving similar activities and remanded the case for a fresh decision based on that precedent.

The Tribunal noted that the main contractor had already paid the service tax liability on the gross contract value, making the situation revenue neutral. However, the verification of this fact was deemed necessary during the remand process. Additionally, the Tribunal found the demand to be barred by limitation, considering the appellant's illiteracy and lack of record-keeping not indicative of malafide intent. The Tribunal emphasized that the absence of positive evidence of malafide intention did not justify the invocation of a longer limitation period. Consequently, the impugned order was set aside, and the matter was remanded for denovo adjudication by the Commissioner to consider all the aspects discussed.