2018 (10) TMI 545 - AT - Service Tax

Short payment of Service Tax - whether the appellant herein is required to discharge the differential service tax liability on the services rendered of erection of telecom towers, construction of petrol pumps and industrial buildings, erection and painting of telecom towers, erection and installation of telecom equipments as a sub-contractor, erection of railway signalling system (railways) or otherwise? Held that - The services rendered by the appellant as engaged herein above are indeed rendered by the appellant; that the billing is done on erection per tower basis rate; entered into agreements with various telecom service providers and considered the amounts as composite contracts involving supply of material and services and as per their understanding, paid tax after availing abatement of 67% as provided. In respect of the telecom tower installation services, construction of petrol pumps and industrial buildings, erection and painting of telecom towers and erection of signalling system for railways, these works have been awarded to the appellant on turnkey basis for laying the foundation as per the design, erect tower materials on the foundation, civil works for base station and consumption of materials like cement, steel for laying the foundation and construction of petrol pumps, industrial buildings are undisputedly composite contract for supply in materials and in the case of works contract in respect of railways, it is a works contract awarded to the appellant - the tax demand confirmed on tower implementation service, erection and painting services, erection services as sub-contractor and erection of signalling system for railways and construction services rendered to IOCL for the period prior to 01.06.2007 needs to be set aside. Demands raised on appellant post 01.06.2007 under the category of tower implementation services and erection and installation services as a sub-contractor - Held that - The demands raised under these two heads needs reconsideration by the adjudicating authority as the random perusal of the documents and impugned order indicate that the claim of the appellant has not been considered in proper perspective by the adjudicating authority - matter on remand. Demand on signalling system erected for railways, post 01.06.2007 - Held that - The said work has been executed by the appellant under a contract awarded by the railways which has to be considered as works contract and the definition of works contract under Sec.65 (105) (zzzza), excludes from the tax liability, the work executed for railways - Demand set aside. Penalties - Held that - The entire issue involved in this case is of interpretation and covered by the decision of the Apex Court for substantial period and set aside by us, interest and penalties are set aside - penalties set aside. As regards the interest liability for the amounts which needs to be reconsidered by the adjudicating authority, it is not open to the adjudicating authority to come to an appropriate conclusion, as also in respect of the penalties on those amounts. Appeal disposed off.

Summary

Issues involved:
1. Whether the appellant is liable to discharge the differential service tax liability on various services provided.

Analysis:

Issue 1: Differential Service Tax Liability

The appellant, engaged in manufacturing tower parts and providing various services, was investigated for alleged short payment of service tax. Show Cause Notices were issued, leading to demands confirmed by the adjudicating authority. The appellant contested the demands, arguing that pre-01.06.2007 contracts were not taxable works contracts and post-01.06.2007 demands required verification. The department argued that the appellant rendered taxable services and should discharge the tax liability. The Tribunal analyzed the services provided by the appellant, billing methods, and contracts with service providers. The Tribunal found that services like tower installation, construction, painting, and signalling system erection were composite contracts involving material supply and services. The demands raised for these services pre-01.06.2007 were set aside based on the judgment of Larsen & Toubro Ltd. The demands post-01.06.2007 were remitted for reconsideration. The demand on signalling system erection for railways post-01.06.2007 was held unsustainable. Interest and penalties were set aside, leaving it to the adjudicating authority to decide on appropriate conclusions.

In conclusion, the Tribunal disposed of the appeal on 11.09.2018, setting aside demands for certain services pre-01.06.2007, remitting post-01.06.2007 demands for reconsideration, and holding the demand on signalling system erection for railways post-01.06.2007 as unsustainable. Interest and penalties were set aside, leaving the adjudicating authority to make appropriate decisions.