2019 (5) TMI 261 - AT - Service Tax

Classification of services - services of installation of electrical devices and other civil work like construction of road - Works Contract Service or Erection, Commissioning or Installation Service? - period prior to 01.06.2007 - HELD THAT - Considering the fact that the contract included both service as well as supply of materials, under works contract service, but the period is clearly prior to 01.06.2007 and hence, the Ld. Advocate is correct in his assertion that the issue is squarely covered by the decision of Hon ble Apex court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT where it was held that demand do not sustain prior to 01.06.2007 - demand set aside. Whether the service provided to NIT, Bharadhidasan University, BHEL School are liable to service tax under the category of Erection, Commissioning or Installation Services prior to 01.06.2007 and dropped for the subsequent period? - HELD THAT - The demand on this is not sustainable in view of the Hon ble Supreme Court judgment in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT - from 01.06.2007, the demand on activity undertaken at BHEL school/hospital is not sustainable. Whether services regarding conversion of single phase into three phase service connection for BHEL quarters and laying of HT cables at the residential township are liable to be taxed? - HELD THAT - Laying of cables beyond the distribution point of residential complexes alone becomes taxable but, in the impugned order we do not see any discussion or analysis of the actual facts involved but, fasten the liability - this issue is required to be remanded for factual verification to be placed on record and therefore to determine the tax liability, if any. Imposition of penalty - HELD THAT - The issue involved was clearly of interpretation which came to be settled only by the Hon ble Supreme Court and therefore benefit of Section 80 could be extended - penalty deleted. Appeal allowed in part and part matter on remand.

Summary

Issues involved: Classification of services under different categories for service tax liability, applicability of service tax on specific activities, penalty under Sections 76, 77, and 78 of the Finance Act, 1994.

Classification of services for service tax liability:
The appellant, engaged in providing services like installation of electrical devices and civil work, was investigated for not discharging service tax liability on services rendered to various entities. The adjudicating authority confirmed the demands proposed, including service tax, interest, and penalties. On appeal, the Commissioner (Appeals) upheld the order, leading to the appellant filing this appeal. The issues considered included the classification of services under different categories for service tax liability. The Ld. Advocate argued that the classification of services as 'Erection, Commissioning or Installation Services' for the period up to 31.05.2007 was incorrect, citing a Supreme Court ruling. The liability to tax on this ground was set aside.

Applicability of service tax on specific activities:
Regarding the demand of service tax on activities undertaken at various institutions before 01.06.2007, the Ld. Advocate contended that the demand was not sustainable based on legal precedents. The demand on certain activities was set aside, and a part of the issue was remanded for factual verification. An additional point raised during the hearing led to the remanding of another issue to the original authority for further review. The demand related to the conversion of single phase into three-phase service connection was also remanded for clarification on the tax liability.

Penalty under Sections 76, 77, and 78 of the Finance Act, 1994:
The penalty under Section 78 was set aside due to the issue being one of interpretation, benefiting from a Supreme Court decision. However, the penalty under Section 77 was upheld. The appeal was partly allowed and partly remanded, with specific directions provided for each issue. The judgment provided a detailed analysis of each issue raised and the legal basis for setting aside or upholding demands and penalties.

This judgment by the Appellate Tribunal CESTAT CHENNAI thoroughly analyzed the issues surrounding the classification of services for service tax liability, the applicability of service tax on specific activities, and the penalties levied under Sections 76, 77, and 78 of the Finance Act, 1994. The decision was based on legal interpretations, precedents, and factual considerations, ensuring a comprehensive review of the appellant's contentions and the lower authorities' orders.