2018 (11) TMI 29 - AT - Service Tax

Levy of service tax - Works contract service - whether the appellant is liable to tax prior to 1st June 2007 under the category ECIS? - demand for period from 1.6.2007 - scope of SCN. Held that - The correct and specific classification of subject services during the period from 1st June 2007 onwards is under works contract service - Admittedly, the work done prior to 1st June 2007 being similar, we hold the classification adopted by the adjudicating authority under Erection, commissioning and installation service (ECIS) is erroneous, and in conflict of the ruling of the Hon ble Supreme Court in the case of CCE Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT . Demand after 1st June 2007 - scope of SCN - Held that - Admittedly, there is no such proposal in the show cause notice to tax the same under works contract service . Whereas adjudicating authority have classified the services post 1st June 2007 under works contract service and have levied the tax - in absence of proposal in the show cause notice, the demand confirmed under the category WCS is erroneous and the same is beyond the scope of the show cause notice - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of services under 'works contract service' prior to and after 1st June 2007, Tax liability under ECIS, Absence of proposal in show cause notice for tax under WCS.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the issue revolved around the classification of services provided by the appellant under the category of 'works contract service' both before and after 1st June 2007. The adjudicating authority had initially classified the work done by the appellant under 'Erection, commissioning and installation service (ECIS)' erroneously. The tribunal, after examining the record and referring to a Supreme Court ruling, held that the correct classification for the services post 1st June 2007 was indeed 'works contract service'. The tribunal found the demand for tax under ECIS prior to 1st June 2007 to be incorrect based on the similarity of work done before and after that date, as well as the conflicting classification by the adjudicating authority.

Regarding the tax liability under 'works contract service' after 1st June 2007, the tribunal noted that there was no proposal in the show cause notice to levy service tax under WCS. Despite this, the adjudicating authority had classified the services post 1st June 2007 under works contract service and imposed the tax. The tribunal held that in the absence of a proposal in the show cause notice, the demand confirmed under the category of WCS was erroneous and beyond the scope of the notice. Consequently, the tribunal set aside the demand for the period from 1st June 2007 to 31st March 2010.

In conclusion, the tribunal set aside the impugned order and allowed the appeal, granting the appellant consequential benefits in accordance with the law. The judgment highlighted the importance of proper classification of services under the relevant tax categories and emphasized the necessity of adherence to the procedures outlined in show cause notices to ensure the validity of tax demands.