2019 (2) TMI 140 - AT - Service Tax

Construction of Complex services - period 2005-06 to 2008-09 - demand of service tax - Held that - Undisputedly the contracts / works contract accepted by the appellants during the disputed period are of composite contracts involving both sides of materials and services. The Hon ble Apex court in the case of Larsen and Toubro 2015 (8) TMI 749 - SUPREME COURT has held that prior to 1/6/2007 such composite contracts cannot be subject to levy of service tax. After the said period, the tribunal in the case of Real Value promoters pvt Ltd 2018 (9) TMI 1149 - CESTAT CHENNAI has held that the demand of service tax for composite contracts after 1/6/2007 can be only under works contract services, and cannot be demanded under CICS/ccs etc. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax under Construction Complex services for the period 2005-06 to 2008-09.

Analysis:
The case involved an appellant engaged in construction activities who was found to have not discharged service tax liability under Construction Complex services. The department issued a show cause notice proposing to demand service tax, interest, and penalties for the period 2005-06 to 2008-09. The original authority confirmed the demand, leading the appellant to appeal before the Tribunal.

The appellant argued that for the period prior to 1/6/2007, composite contracts involving supply and transfer of goods were not subject to service tax based on a decision by the Hon'ble Apex Court. For the period after 1/6/2007, the show cause notice proposed service tax under Construction Complex services. The appellant cited a Tribunal case stating that works contract (Additional works) could not be taxed before 7/6/2007, thus challenging the demand.

The Ld.AR supported the findings in the impugned order, leading to a hearing where both sides presented their arguments. The Tribunal considered the issue of demand for service tax under Construction Complex services for the disputed period. It was noted that the contracts accepted by the appellants during that time were composite contracts involving materials and services. Referring to legal precedents, the Tribunal concluded that prior to 1/6/2007, such composite contracts were not subject to service tax. After that date, the demand for service tax for composite contracts could only be under works contract services, not under Construction Complex services. Therefore, the demand for the disputed period was deemed unsustainable, and the impugned orders were set aside. The appeals were allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax under Construction Complex services for the period 2005-06 to 2008-09 based on the nature of the contracts and legal interpretations regarding the levy of service tax on composite contracts.