2018 (11) TMI 307 - AT - Service Tax

Date of effectiveness of service - services of erection of transmission tower at site - Whether the services of erection of transmission tower at site is covered by taxable services under the head Erection, Commissioning and Installation with effect from 10.09.2001 or with effect from 01.05.2006 which is date of amendment of statutory definition of the said services? - Held that - As per the amended definition with effect from 01/05/2006, Erection, Commissioning or Installation of structures, whether pre-fabricated or otherwise was added with effect from 01/05/2006 only. Accordingly, the Service Tax prior to 01/05/2006 was not leviable on the services provided by them - this particular service i.e., Erection, Commissioning or Installation of structures was specifically incorporated in the definition of Erection, Commissioning or Installation service with effect from 01/05/2006. Therefore, it is clear that this service was not covered under the definition of Erection, Commissioning or Installation prior to 01/05/2006. Refund claim - duty paid under protest or not? - time limitation - unjust enrichment - Held that - Once a letter dated 14/10/2005 was filed towards the payment of Service Tax under protest, in our considerate view, the protest was in continuation and whatever Service Tax was paid, that will be treated as under protest. Accordingly, time bar will not apply in this case - Only by proving that the incidence was not passed on to the service provider is not sufficient but it is also required that the incidence of such service tax was not passed on to any other persons also which can be established from the books of accounts. Therefore, the appellant is required to establish that incidence of service tax paid by them was not passed on to any other persons by providing the sufficient evidence - matter requires reexamination. Whether the appellant s service is covered under Work Contract service. If so, whether it is taxable prior to 01.06.2007? - Held that - To conclusively decide whether the service is of works contract or other service, some vital facts need to be verified such as that whether the service was provided along with material, whether the appellant have discharged the VAT/WCT to the concerned State Government. On ascertaining the above facts it can be decided whether the service is of works contract or otherwise. If it is found that the service is of works contract, it is not taxable prior to 01/06/2007 - Matter on remand. Matter remanded to the Adjudicating Authority for passing a fresh order - appeal allowed by way of remand.

Issues Involved:
1. Taxability of services of erection of transmission tower under Erection, Commissioning, and Installation services.
2. Time bar and unjust enrichment in refund claim of Service Tax paid.
3. Classification of appellant's service under Work Contract service and its taxability pre-01.06.2007.

Analysis:

Issue 1: Taxability of Erection Services
The primary issue in this case was to determine the taxability of the services provided by the appellant related to the erection of transmission towers. The crux of the matter was whether these services fell under taxable services under the head Erection, Commissioning, and Installation before or after the amendment of the statutory definition on 01.05.2006. The appellant contended that their services were not liable for Service Tax before the said amendment as the specific inclusion of erection, commissioning, or installation of structures was added only from 01.05.2006. The appellate tribunal concurred with this argument, stating that the service in question was not covered under the definition of Erection, Commissioning, or Installation services prior to 01.05.2006. The tribunal also noted the appellant's claim that their service could be categorized as a works contract, which became taxable only post-01.06.2007. However, to conclusively determine the classification, further verification of facts was deemed necessary, such as whether the service included material provision and discharge of VAT/WCT obligations to the State Government.

Issue 2: Time Bar and Unjust Enrichment in Refund Claim
Regarding the time bar and unjust enrichment in the refund claim of Service Tax paid, the tribunal examined the appellant's submission of protest against the tax payment dated 14/10/2005. The lower authority contended that the protest was only valid for the cheques deposited and not for subsequent payments, thus rendering the refund claim time-barred. However, the tribunal disagreed, stating that once a protest is raised on a particular issue, it continues until the dispute is resolved. Therefore, the time bar did not apply in this case. On the issue of unjust enrichment, the appellant argued that since the Service Tax was not paid by the service recipient, there was no unjust enrichment. However, the tribunal emphasized that mere non-payment by the recipient was insufficient to prove non-passing of the tax burden. The appellant needed to demonstrate through sufficient evidence that the incidence of the Service Tax paid was not transferred to any other party, as mandated by Section 11B.

Issue 3: Classification under Work Contract Service
The final issue revolved around the classification of the appellant's service under the category of works contract and its taxability pre-01.06.2007. The tribunal acknowledged that the appellant's service, being a composite contract involving material provision, prima facie fell under the works contract category. However, conclusive verification of certain facts was deemed necessary to ascertain the exact nature of the service. The tribunal referred to the Supreme Court's ruling that works contract services were not taxable before 01.06.2007, emphasizing the need to establish the nature of the service before determining its taxability.

In conclusion, the tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh decision based on the observations and analysis provided in the judgment.

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