2018 (12) TMI 786 - AT - Service Tax

Commercial or industrial construction service - raising of height and upgradation of the ash pond by the appellant for M/s NALCO - period from 10.9.2004 to 31.3.2008 - extended period of demand - Held that - It is on record that the appellant has paid the service tax to the extent of ₹ 2,17,741/- initially but on advise of their client i.e. NALCO they stopped the payment of service tax on being told that the proposed work is within the ambit of definition of dam, which covers pond and services have been relatable to water resources and therefore the service would not come under the category of commercial or industrial construction service. The appellant contention is that the scope of work includes supply of material along with provisions of service in construction raising height of the ash pond, the situation being so, the activity would come under work contract service, which is not leviable to service tax prior to 1.6.2007 in view of the Hon ble Supreme Court decision in the case of L&T 2015 (8) TMI 749 - SUPREME COURT also period subsequent to 1.6.2007 this issue is part of the work contract service and not CICS. As the demand raised under the CICS, the same is not sustainable and, therefore, the assessee appellant contention that they are not leviable to service tax is required to be upheld in view of various decisions. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute over service tax demand on construction work awarded by NALCO to the appellant.
2. Appellant's contention regarding the applicability of service tax under commercial or industrial construction service (CICS).
3. Interpretation of the scope of work and applicability of service tax prior to and post 1.6.2007.
4. Consideration of case laws and legal precedents in determining the sustainability of the service tax demand.
5. Assessment of the demand under CICS and work contract service.
6. Decision on the appeals filed by both the appellant and the Revenue.

Analysis:
1. The judgment pertains to two appeals filed by the appellant-assessee and the Revenue against the Order-in-Original passed by the Commissioner of Central Excise, Customs & Service Tax. The dispute arose from a service tax demand of ?1,27,90,928 for the period from 10.9.2004 to 31.3.2008 concerning construction work awarded by NALCO to the appellant. The appellant contended that the work involved the transfer of property in goods for which VAT had been paid, and thus, the demand under CICS was not sustainable.

2. The appellant argued that the demand under CICS was not valid prior to 1.6.2007 based on legal precedents such as the Supreme Court judgment in the case of CCE Kerala Vs. Larsen & Toubro. They also cited various decisions supporting their claim that demands under CICS for composite contracts were not sustainable post 1.6.2017. The appellant further contended that the construction work related to a dam fell outside the scope of service tax under CICS as per the statutory definition.

3. The Tribunal considered the scope of work undertaken by the appellant for NALCO, which involved raising the height and upgrading the ash pond. The appellant had initially paid a portion of the service tax but ceased payment based on advice from NALCO that the work fell under the definition of a dam and was not subject to service tax. The Tribunal agreed with the appellant's arguments, citing legal precedents and holding that the demand under CICS was not sustainable both pre and post 1.6.2007.

4. After reviewing the case laws referenced by the appellant, the Tribunal concluded that the demand against the appellant was not valid. Consequently, the impugned order was set aside, and the appeal filed by the appellant was allowed. On the other hand, the departmental appeal was dismissed based on the reasons provided in the judgment. The Tribunal pronounced its decision in court, thereby resolving the dispute over the service tax demand on the construction work undertaken by the appellant for NALCO.