2018 (10) TMI 1478 - AT - Service Tax

Classification of services - whether the services rendered by the appellant are in the nature of work contract service or the interior decorator services? - Providing services in relation to partition work, metal glass works, civil works, wood work finishing, flooring, ceiling, false ceiling, hardware fittings, blinds, wall paper fixing, electrical work, plumbing work, AC ducting and other similar services in relation to constructed buildings/ offices etc. Held that - The appellant was not to provide services as that of design and technical assistance or consultancy. The moment the nature of services as mentioned herein are provided without the said technical consultancy, the service comes out of the ambit of interior decoration services. These particular findings are sufficient for us to hold that Show Cause Notice has wrongly proposed the demand under interior decorator services and the adjudicating authority below also has been wrong by holding these services as interior decorator services. The perusal of order under challenge clarifies that the Commissioner himself has acknowledged the services of the appellant when provided to OC-CWG to be in the nature of work contract service. The order is absolutely silent to create any distinction about services being provided by the appellant to the clients other than OC-CWG - The Commissioner is also observed to be wrong while forming an opinion that the activity of the appellant do not fall under any clause i.e. A-E of the definition to works contract services - the demand as confirmed is not sustainable. Time limitation - Held that - The period in dispute is w.e.f. 2006-07 to 2011-12. The Show Cause Notice is dated 19.10.2011 - the activity of appellant since is held to be work contract service, the Department is held to have wrongly invoked the extended period of limitation as there remains no evasion of tax on part of appellant what to talk of the intent to so evade. Show Cause Notice is therefore held to be barred by time. For the demand within the normal period of limitation, the demand is already held not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Original regarding service tax liability for interior decoration services provided to clients, distinction between works contract services and interior decorator services, time limitation for Show Cause Notice.

Analysis:

1. Service Tax Liability for Interior Decoration Services:
The appellant, engaged in construction and interior decoration services, faced a Show Cause Notice proposing a demand for alleged non-payment of service tax. The Department doubted the tax liability discharge by the appellant for services provided to clients, including the OC-CWG. The appellant argued that the services were works contract services, not interior decoration services, and that the Notice was time-barred. The Department contended that the services were rightly classified as interior decoration services. The Tribunal analyzed the definitions of works contract services and interior decorator services to determine the nature of the appellant's services. It was observed that the appellant's activities did not align with the definition of interior decorator services, as they involved construction work based on technical specifications, not design or consultancy services. The Commissioner had previously acknowledged the services as works contract services, and the Tribunal found no justification for reclassification. The demand based on interior decorator services was deemed unsustainable.

2. Time Limitation for Show Cause Notice:
The Tribunal also examined the time limitation aspect. The dispute period was from 2006-07 to 2011-12, with the Show Cause Notice issued in 2011 invoking the extended period of limitation. However, the Tribunal noted the lack of evidence showing suppression or misrepresentation by the appellant to evade taxes. Given that the appellant had deposited taxes considering the services as works contract services, the Tribunal held that the Notice was time-barred. As the appellant's activities were classified as works contract services, there was no tax evasion intent. Consequently, the Show Cause Notice was considered to be beyond the permissible time limit.

3. Decision:
Considering the above analysis, the Tribunal set aside the Order-in-Original, ruling in favor of the appellant. The demand, both within and beyond the normal limitation period, was deemed unsustainable. The Appeal was allowed, emphasizing that the appellant's services were correctly classified as works contract services, not interior decoration services. The Tribunal concluded that the Department wrongly invoked the extended period of limitation due to the absence of tax evasion on the appellant's part.