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2019 (7) TMI 957 - AT - Service TaxClassification of services - works contract service or not - the works undertaken by the appellant was for fabrication, supply of material, installation and commissioning of various items as per the contract entered between the parties - HELD THAT - In the present case, there is no dispute that the works undertaken by the appellant was for fabrication, supply of material, installation and commissioning of various items as per the contract entered between the parties. Further, in the impugned order Commissioner has given a finding that there was a supply of material and provision of labour and therefore there is no dispute that the works contract involving transfer of goods as well as rendering of service. Further, the appellants are also paying sales tax/VAT under the Kerala Sales Tax/Kerala VAT on the activities in dispute. Once the appellant is rendering the Works Contract Service, then in view of the settled law in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , no service tax is leviable on Works Contract Service for the period prior to 01.06.2007 and in the present case the entire period is prior to 01.06.2007 and therefore by following the ratio of the decision of the Apex Court in the case of Larsen Toubro, appellant is not liable to pay any service tax. Appeal allowed - decided in favor of appellant.
Issues:
1. Confirmation of demand under Section 73(2) of the Finance Act 1994. 2. Imposition of interest under Section 75 and penalties under Sections 76, 77, and 78. 3. Classification of services provided by the appellant. 4. Dispute regarding payment of service tax on the gross amount charged. 5. Eligibility for abatement and cenvat credit. 6. Applicability of Works Contract Service and liability for service tax. 7. Bar on substantial demand due to limitation period. Confirmation of Demand: The case involved an appeal against an order confirming a demand of ?56,45,623 under Section 73(2) of the Finance Act 1994, along with interest and penalties. The demand was related to services provided by the appellant falling under the category of "Maintenance or Repair Services" under the Finance Act. The Commissioner upheld the demand based on a show-cause notice issued to the appellant regarding taxable services provided from 01.07.2003 to 31.03.2006. Classification of Services: The appellant argued that the services provided should be classified as "Works Contract Service" and not liable to service tax during the disputed period. The appellant contended that the conditions for Works Contract Service were met, including the transfer of property in goods and contract purposes. The appellant cited the case law to support the non-leviability of service tax on Works Contract Service prior to 01.06.2007. Dispute on Payment of Service Tax: There was a dispute regarding the payment of service tax on the gross amount charged by the appellant. The appellant claimed abatement under specific notifications and availed cenvat credit for service tax payments. The Commissioner found discrepancies in the appellant's tax calculations, leading to a short payment of service tax and education cess. Abatement and Cenvat Credit Eligibility: The appellant argued for eligibility for abatement and cenvat credit under specific notifications, emphasizing that they had only availed credit on input services, not inputs. The appellant maintained that the activity of fabrication amounted to manufacturing, exempting them from service tax liability. Works Contract Service and Tax Liability: The Tribunal found that the works undertaken by the appellant fulfilled the requirements of Works Contract Service, involving the supply of materials and provision of labor. Citing the decision in CCE Vs. Larsen & Toubro, the Tribunal ruled that no service tax was leviable on Works Contract Service for the period before 01.06.2007. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant. Limitation Period Bar: The appellant contended that the substantial demand was barred by the limitation period, except for a specific period, as the show-cause notice was issued beyond the normal period. However, the Tribunal did not delve into this issue, as the appellant's non-liability for service tax under Works Contract Service was sufficient to allow the appeal. ---
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