2019 (2) TMI 1404 - AT - Service Tax

Valuation - Abatement claim - composition scheme/ Rule 2A of Service Tax Composition Rule - rection, commissioning or installation services - consultation services/ commercial or industrial service - consulting engineering service - Held that - The service provided by the appellant pertain to work contract services which is leviable for service tax only after 1/06/2007, and therefore, the demand prior to 01/01/2006 to 31/05/2007 is liable to be dropped - Similarly the demand in respect of pure trading of trading goods is also not sustainable as the same falls outside the ambit of Finance Act. Also the demand in respect of airport is also not sustainable being the outside the definition of work contract services . Residential complex of the Government employee - Held that - The demand is not tenable as the amount for personal use and outside the work contract. It is also found that the demand created on the value of material is liable to be dropped as under the composite contract only the service tax portion is to be taxed excluding the material portion in terms of the Rule 2 A of composition scheme and Notification No. 12/2003-ST dated 20/06/2003. All these issues are required to be worked out once again. The Ld. Adjudicating Authority is directed to consider the submissions made by the appellant following the departmental circular and judicial precedent on the issue at hand and pass appropriate order after affording the opportunity of personal hearing - appeal allowed by way of remand.

Summary

Issues:
Classification of services for service tax, applicability of demand notices, benefit of notifications, inclusion of VAT/sales tax in service tax calculation, imposition of interest and penalties, appropriating service tax, calculation errors, abatement under Notification 12/2003-ST, demand related to pure trading activities, demand related to airports and residential complexes, consideration of judicial precedents.

Analysis:
The appellant challenged the Order-in-Original confirming a demand of ?12,06,61,504 under the Finance Act, 1994. The appellant argued that the services provided should be classified as 'work contract services' post-01/06/2007, not under 'commercial and industrial construction services' for contracts pre-01/06/2007. They contended that services for non-commercial projects like government buildings, airports, and residential complexes of government employees are not taxable. The appellant claimed denial of benefits under Notification No. 12/2003-ST due to missing sales tax details. They also disputed the imposition of service tax on trading activities and goods sales, which they deemed unconstitutional. The appellant objected to including VAT/sales tax in service tax calculations and contested interest and penalties levied.

The appellant argued that service tax was discharged but not appropriated, leading to an incorrect demand calculation. They claimed that certain demands should be dropped based on judicial decisions and incorrect calculations. The appellant sought the benefit of abatement under Notification 12/2003-ST and challenged the inclusion of VAT/sales tax in service tax calculations. They referenced various judicial precedents to support their arguments.

The Tribunal found infirmities in the impugned order. It noted that services provided by the appellant fall under 'work contract services' taxable post-01/06/2007, warranting the dropping of demands pre-01/06/2007. The Tribunal deemed demands related to pure trading activities, airports, and residential complexes of government employees as unsustainable. It directed the exclusion of material value from taxation under the composition scheme and Notification No. 12/2003-ST. The Tribunal instructed the Adjudicating Authority to reconsider the case, considering appellant's submissions, departmental circulars, and judicial precedents, before passing a new order.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal by remanding the case to the Original Authority for a fresh decision following the provided directions and considerations.