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2019 (3) TMI 39 - AT - Service TaxClassification of services - Construction of Residential Complex Services or works contract service? - appellant provided various services such as construction of boundary wall, sewerage and drainage system, roads, laying of pipeline etc. - period 2006-07 to 2010-11 - Held that - The Apex Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT has held that composite services are to be classified only under the category of Works Contract Services with effect from the date of introduction of such service i.e. 1.06.2007. The Apex Court has also categorically held in its finding that such composite services cannot be liable for service tax under any other category prior to the introduction of WCS - thus, there can be no levy of service tax for the period upto 31.05.2007. The perusal of the Show Cause Notice indicates that the demand for the service tax has been raised under the category of Construction of Residential Complex Services. In view of the Apex Court decision in the case of Larsen and Tubro the liability for service tax, if at all, can be raised only under the category of WCS. Appeal allowed - decided in favor of appellant.
Issues:
1. Whether the demand for service tax made in the impugned order is sustainable. 2. Whether the activity of the appellant falls under the category of Works Contract Service. 3. Whether the demand for service tax under the category of Construction of Residential Complex Services is valid. Analysis: Issue 1: The appellant provided various construction services in the period 2006-07 to 2010-11, including construction of boundary walls, sewerage systems, roads, and laying pipelines in residential complexes. The Revenue contended that these services are taxable under Construction of Residential Complex Services. A Show Cause Notice was issued, leading to the impugned Order-in-Original upholding the service tax demand but granting abatement. The appellant challenged this demand in the present appeal. Issue 2: The appellant argued that the services provided were composite in nature, involving the supply of construction material, and should be classified as Works Contract Service. Citing the Supreme Court decision in Larsen and Tubro case, it was contended that composite services are liable for service tax only under Works Contract Service, effective from 1.06.2007. The appellant claimed that the demand for service tax before this date should be set aside. The Tribunal agreed, stating that composite services cannot be taxed under any other category before the introduction of Works Contract Service. Issue 3: The Show Cause Notice proposed a demand for service tax under Construction of Residential Complex Services, which the Tribunal found to be incorrect based on the Larsen and Tubro decision. Relying on precedents like the Ashish Ramesh Dasarwar case, the Tribunal concluded that demands raised under the wrong category cannot be sustained. Therefore, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the liability for service tax, if any, should be under the category of Works Contract Service in accordance with the Supreme Court ruling. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax made in the impugned order and allowing the appeal based on the correct classification of the services provided by the appellant as Works Contract Service in line with the Supreme Court decision.
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