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2019 (1) TMI 1040 - AT - Service TaxLevy of Service tax - construction of mobile tower foundation - related civil works performed by the appellant - period from December 2004 to June 2007 - Held that - For the period after 01.06.2007, the Chennai Bench of the CESTAT in the case of M/s. Real Value Promoters Pvt. Ltd. & Ors. Vs. Commissioner of G.S.T. & Central Excise, Chennai & Ors. 2018 (9) TMI 1149 - CESTAT CHENNAI have extrapolated the ratio laid down by the Hon ble Apex Court in M/s. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT and held that even after 01.06.2007, service tax liability for composite contracts can only be demanded under Works Contract Service and not under CICS, etc. The impugned Order demanding the amount of tax liability under CICS for a composite contract will not survive - appeal allowed - decided in favor of appellant.
Issues involved:
Demand of service tax liability on construction of mobile tower foundation and related civil works performed by the appellant for M/s. Bharathi Airtel Ltd. during December 2004 to June 2007. Analysis: Issue 1: Demand of service tax liability under Commercial or Industrial Construction Service (CICS) for works performed by the appellant. The Department asserted that the services provided by the appellant for construction work fell under CICS and were subject to service tax. A Show Cause Notice was issued to the appellant for non-payment of service tax amounting to ?20,16,810 under CICS, along with interest and penalties. The Original Authority and the Commissioner (Appeals) upheld the demand. The appellant contended that the work was executed on a Works Contract basis with material, supported by the work order and the application of material abatement under Notification No. 15/2004-ST. Citing the Supreme Court's decision in C.C.E. Vs. M/s. Larsen & Toubro Ltd., the appellant argued that services rendered on indivisible Works Contract basis were not taxable before 01.07.2007. The appellant referred to various court cases that supported this position. The Tribunal agreed with the appellant, holding that the demand under CICS for the period before 01.06.2007 was not sustainable. Issue 2: Appropriation of voluntarily paid service tax amounts by the appellant. The respondent argued that the appellant had voluntarily paid certain service tax amounts under CICS, which should be appropriated. However, the Tribunal noted that the issue was covered by relevant case laws, including the Supreme Court's decision in M/s. Larsen & Toubro Ltd., which established that service tax liability for composite contracts could only be demanded under Works Contract Service, even after 01.06.2007. Citing a Chennai CESTAT case, the Tribunal held that the impugned Order demanding tax liability under CICS for a composite contract was not valid and needed to be set aside. Conclusion: The Tribunal allowed the appeal, setting aside the demand for service tax liability under CICS for the period before and after 01.06.2007. The appellant was granted consequential benefits as per law. This detailed analysis covers the issues involved in the legal judgment regarding the demand of service tax liability on construction works performed by the appellant.
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