2018 (12) TMI 435 - AT - Service Tax

Benefit of abatement - commercial and industrial construction services - case of the department is that abatement of 67% is not admissible as per the aforesaid Notification on the ground that the service provided by the appellant is falling under the category of site formation and clearance, excavation and earth moving and demolition - Held that - It is clear that the site clearance and excavation is an incidental and ancillary to civil work - the service is correctly classifiable under the commercial or industrial construction service. The abatement on 67% as per Notification 01/2006-ST is legally admissible to the assessee - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of service under abatement notification

Analysis:
The case involved a dispute regarding the classification of services provided by the appellant under abatement notifications. The appellant had a contract to build a telecommunication tower with civil work and claimed a 67% abatement under specific notifications. The department contended that the service fell under site formation and clearance, excavation, and earth moving, denying the abatement. The adjudicating authority and the Ld. Commissioner (Appeals) upheld this view. The appellant argued that the service should be classified under commercial or industrial construction services, making them eligible for the abatement.

The Ld. Chartered Accountant for the appellant emphasized that the composite contract primarily involved civil work, including site clearance, excavation, and making a civil structure. On the other hand, the Ld. Suptd. (AR) for the Revenue reiterated that the service included excavation and site formation, justifying the denial of abatement under the notification.

After careful consideration, the Tribunal found that the composite contract was primarily for a civil structure on which the telecommunication tower would be erected. While acknowledging a small portion related to site formation, the Tribunal deemed it incidental and ancillary to the main service of civil work. The Tribunal noted that the major portion of the contract was for the civil structure, supporting the classification under commercial or industrial construction services. By analyzing the bifurcation of services and the nature of the work, the Tribunal concluded that the abatement of 67% under the relevant notification was legally admissible to the appellant. Consequently, the demand for abatement by the department was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.

In summary, the Tribunal's decision centered on the correct classification of the appellant's services under the abatement notifications, emphasizing the predominant nature of the civil work in the composite contract and the ancillary nature of site formation activities. The judgment clarified the eligibility of the appellant for the abatement and overturned the department's decision based on the specific facts and legal provisions analyzed during the proceedings.