2019 (2) TMI 1032 - AT - Service Tax

Construction services - commercial and industrial construction services - composite contract involving both labour and material - non-payment of service tax - N/N. 01/2006 dated 01.03.2006 - Held that - The appellant had executed a composite work contract during the financial year 2006-2007 which was inclusive of both material and labour cost and therefore, prima facie the appellant was entitled for abatement as per the provisions of notification No. 01/2006 dated 01.03.2006. It also appears that after the provision of abatement, the required amount of service tax has already been discharged by the appellant much before the issuance of show cause notice. The matter remanded for denovo adjudication to the original adjudicating authority to verify the claims of the appellant and if same are found in order, necessary abatement as per their entitlement under N/N. 01/2006 dated 01.03.2006 should be allowed to them - appeal allowed by way of remand.

Summary

Issues:
1. Service tax liability on a composite construction contract.
2. Abatement entitlement under Notification No. 01/2006.
3. Discharge of service tax liability before show cause notice.
4. Consideration of evidence and claims by the adjudicating authority.
5. Remand for fresh adjudication.

Analysis:
1. The appellant, engaged in construction services, was alleged to have evaded service tax on a composite contract with M/s. Rajasthan State Warehousing Corporation. The department issued a show cause notice for non-payment of service tax, confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals).

2. The appellant contended that service tax amounting to &8377; 1,53,104/- was deposited before the show cause notice and claimed entitlement to a 67% abatement under Notification No. 01/2006 for the composite contract. The agreement clearly indicated the inclusion of material and labor costs.

3. The Tribunal noted that the appellant had discharged the service tax liability before the show cause notice was issued, indicating no short levy. The Tribunal ordered a remand for the adjudicating authority to verify the appellant's claims of abatement entitlement and prior service tax payment.

4. The appellant presented evidence including TR 6 challan, profit and loss accounts, and details of service tax payment, which were not considered by the lower adjudicating authority. The Tribunal directed a fresh consideration of all claims, including penalties, by the adjudicating authority.

5. Consequently, the Tribunal allowed the appeal by remanding the matter for fresh adjudication, setting aside the previous order-in-Appeal. The decision highlighted the need for a thorough verification of the appellant's claims and entitlements under the relevant notification.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision, ensuring a clear understanding of the legal aspects and implications of the case.