2019 (2) TMI 1304 - AT - Service Tax

Maintenance or repair services - Benefit of N/N. 18/2005-ST dated 07.06.2005 - case of the department is that the appellant had provided service of repair and maintenance, therefore, the abatement available for commercial or industrial construction service under N/N. 18/2005-ST is not eligible to the appellant - Held that - The facts that whether the contract was executed with the material and payment of sales tax on works contract service, have not been verified by the adjudicating authority. The adjudicating authority has decided the matter only on the ground that the service falls under the repair and maintenance service, accordingly, the abatement is not available. The matter needs to be remanded to the adjudicating authority for verifying the fact of execution of work with material and whether the same falls under works contract - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility of abatement under Notification 18/2005-ST for repair and maintenance services.
2. Classification of service as works contract service.
3. Verification of execution of work with material for tax purposes.

Eligibility of Abatement under Notification 18/2005-ST:
The appellant had registered under maintenance or repair services and claimed abatement under Notification 18/2005-ST. However, the department contended that the abatement for commercial or industrial construction service was not applicable to the appellant as they provided repair and maintenance services. The differential duty demand was confirmed based on this denial of exemption.

Classification of Service as Works Contract Service:
The appellant argued that they provided both new construction and repair and maintenance services, with the contract executed for service along with material. They paid sales tax on the material portion, considering it a works contract service. Citing the judgment in the case of CCE vs Larsen & Toubro, the appellant claimed that works contract service was not taxable during a specific period. Additional judgments were also presented to support this argument.

Verification of Execution of Work with Material for Tax Purposes:
The Revenue, however, maintained that since the appellant paid sales tax on the material, the sale of goods and service should be considered separately. They argued that the judgment in the Larsen & Toubro case did not apply in this scenario. The Tribunal noted that the adjudicating authority did not verify whether the contract was executed with material and if the criteria for classifying services as works contract were met. As such, the matter was remanded to the adjudicating authority for further examination to determine if the service should be classified under works contract service.

In conclusion, the appeal was allowed for remand to verify the execution of work with material and determine if the service fell under works contract service. The Tribunal emphasized the importance of verifying these facts before making a decision on the eligibility of abatement and classification of services.