2018 (12) TMI 83 - AT - Service Tax

Scope of SCN - Demand under the head Construction of residential complex service and industrial construction service - service were of works contract in nature which finds no place in SCN - Held that - The services provided by the appellant alongwith transfer of goods and merit of classification of the said service provided by the appellant under the category of works contract service as per the decision of the Hon ble Apex Court in the case of Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT whereas the demand has been confirmed against the appellant under the category of construction of residential complexes and commercial or industrial construction service . The merit of classification of service rendered by the appellant is under the category of works contract service and no demand under the category of works contract service issued against the appellant. Therefore, the impugned order is not sustainable in the eyes of law. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax for construction activities under different categories - Works contract service vs. construction of residential complex service and industrial construction service.

Analysis:
The appellant appealed against an order confirming a demand for service tax and interest for the period April 2005 to March 2010 related to construction activities. The appellant was alleged to have undertaken construction work without discharging service tax liability. The Tribunal remanded the matter for de novo adjudication, where the demand of service tax was again confirmed. The appellant contended that the activity fell under works contracts service, citing legal precedents. The appellant argued that free supply of goods should not be included in the assessable value of taxable service. The respondent supported the impugned order.

Upon hearing both parties, the Tribunal considered the nature of services provided by the appellant, involving the transfer of goods. The appellant's services were classified as works contract service based on a Supreme Court decision, contrary to the demand under the categories of construction of residential complexes and industrial construction service. Consequently, the demand against the appellant was deemed unsustainable. The Tribunal held that the service rendered by the appellant should be classified as works contract service, not under the categories mentioned in the demand. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.