2019 (9) TMI 464 - AT - Service Tax

Validity of show cause notice - Audit objections were already settled - Erection Commissioning and Installation Service - availment of abatement on job-work - benefit of N/N. 19/2003 dated 21.08.2003 as amended and N/N. 1/2006-ST dated 01.03.2006 - the objection was raised on the ground that the appellant has not sold any goods and material while providing services to the appellant, but, have received only the amount on job work done by them vide audit objection dated 17.01.2007. HELD THAT - As the audit objection raised by the revenue has already been settled by them on 18.05.2007, in that circumstances, on the same audit objection, show cause notice cannot be issued to the appellant on 28.07.2009. Therefore, the whole of the demand on the basis of said objection is not sustainable and is also time barred. Benefit of N/N. 19/2003 dated 21.08.2003 as amended and N/N. 1/2006-ST dated 01.03.2006 - HELD THAT - As per the agreement between the appellant M/s Steel Strips Wheels Ltd. dated 02.08.2001 on basis of which audit objection was raised have been examined and as per the said agreement the appellant was required to provide material while providing services, in that circumstances, the appellant has rightly availed the benefit of N/N. 19/2003 dated 21.08.2003 as amended and N/N. 1/2006-ST dated 01.03.2006. In that circumstances, the demand of service tax is not sustainable against the appellant. Demand alongwith penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against service tax demand under 'Erection Commissioning and Installation Service'; Applicability of Notification No. 19/2003 and Notification No. 1/2006-ST; Settlement of audit objection; Time-barred demand; Benefit of abatement; Demand confirmation without selling material.

Analysis:
The appellant appealed against the demand for service tax under 'Erection Commissioning and Installation Service'. The appellant was registered for taxable services under 'Maintenance or Repairs Service' and 'Erection, Commissioning & Installation Service'. An audit revealed that the appellant provided services to a recipient on a job work basis without paying service tax on the gross value of services. The appellant availed a 67% abatement but did not sell any material during the service provision. A show cause notice was issued, and the demand was confirmed, denying exemptions under relevant notifications. The appellant contended that objections were previously settled and they provided services along with material as per the contract. The Revenue reiterated the findings of the impugned order.

Upon review, it was found that the objection regarding non-sale of goods during service provision had been previously settled by the Revenue. Issuing a show cause notice based on the same objection later was deemed unsustainable and time-barred. The agreement with the service recipient required the appellant to provide material along with services, justifying the benefit availed under the relevant notifications. Consequently, the demand for service tax was set aside, and no penalty was imposed on the appellant.

In conclusion, the impugned order was set aside, and the appeal was allowed with consequential relief. The judgment highlighted the importance of the settlement of audit objections, the requirement to provide material as per the contract, and the correct application of relevant notifications to determine the liability for service tax.