2019 (3) TMI 1322 - AT - Service Tax

Construction services - construction of Residential Complex Services - Commercial or Industrial Construction Services - non-payment of service tax - period prior to 01.06.2007 - Held that - The Ld. Advocate is correct in his assertion that the issue in dispute is squarely covered by the case laws cited by him, in particular, that of the Hon ble Apex Court in M/s.Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT for the period upto 01.06.2007 - demand do not sustain. Period after 01.06.2007 - Held that - The Chennai Bench of the CESTAT in the case of M/s. Real Value Promoters Pvt. Ltd. & Ors. Vs Commissioner of G.S.T & Central Excise, Chennai & Ors. 2018 (9) TMI 1149 - CESTAT CHENNAI have held that even after 01.06.2007, service tax liability for composite contracts can only be demanded under Works Contract Service and not under CICS etc. - the impugned order demanding the amount of tax liability under CICS for a composite contract will not survive and will require to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Non-registration and non-payment of service tax under Commercial or Industrial Construction Services (CICS)
- Failure to disclose details of payments received for providing services in relation to Construction of Residential Complex Services (RCS)

Analysis:
1. The appellant, a provider of construction services, was issued show cause notices for non-registration and non-payment of service tax under CICS. The appellant failed to include the value of taxable services in their ST-3 returns and did not disclose payment details for services related to RCS.

2. The adjudicating authority confirmed a total demand of service tax amounting to Rs. 75,66,572/- with interest and imposed penalties under Sections 77 and 78 of the Finance Act, 1994. This led to the present appeal challenging the order.

3. During the hearing, the appellant's counsel argued that the issue of whether a composite contract involving service provision and goods transfer could be covered under CICS and RCS was settled by the Supreme Court in a previous case. The counsel cited relevant case laws to support their argument.

4. After considering the arguments and case laws presented, the Bench found merit in the appellant's assertion. The issue in dispute was deemed to be covered by previous judgments, especially those of the Hon'ble Apex Court and the Chennai Bench of CESTAT.

5. It was established that for the period after a specific date, service tax liability for composite contracts could only be demanded under Works Contract Service and not under CICS. Consequently, the impugned order demanding tax liability under CICS for a composite contract was set aside.

6. The appellant's appeal was allowed, granting them consequential benefits as per the law. Additionally, the Department's appeal was dismissed based on the same reasoning provided in the judgment.