2019 (11) TMI 383 - AT - Service Tax

Commercial or Industrial Construction Services - Sub-contractor - composite contract - suppression of facts or not - extended period of limitation - HELD THAT - The period involved as per operative part of the order is from 10.09.2004 to 31.03.2008. On perusal of records it is seen that the period involved as per the transactions in SCN is from 10.09.2004 to November, 2007. Demand under CICS for the period prior to 01.06.2007 - HELD THAT - Undisputedly, the contracts are composite in nature which has been brought out from the evidences placed before us. Though cement and steel was supplied free, other goods viz-wood, sand, consumables were used for execution of the piling works. The appellant has paid VAT and filed VAT returns for the very same work orders for which certificate is issued by the Commercial Tax Officer. Further, a certificate issued by Chartered Accountant is also produced to show that apart from steel and cement other materials have also been used - On perusal of this certificate, it is found that the appellant has used consumables to the amount of ₹ 38,01,188/- in financial year 2004-05 and ₹ 26,62,871/- in 2005-06. There is also purchases of brick, wood and other items which have been used for executing the work orders. Thus, it is established that the contracts are composite in nature. The decision in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT would apply to the period prior to 01.06.2007 and therefore the demand cannot sustain. For the period after 01.06.2007 the decision of the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI as followed in M/S. P. BALAKRISHNAN VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, TIRUNELVELI 2019 (3) TMI 955 - CESTAT CHENNAI would assist the appellant - Applying these decisions, the entire demand cannot sustain. Thus, the demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand under Commercial or Industrial Construction Services (CICS) for the period prior to 01.06.2007 and after; Liability of sub-contractor to pay service tax; Invocation of extended period for demand raised.

Analysis:
1. Confirmation of demand under CICS for the period prior to 01.06.2007 and after:
The appellant argued that the works carried out were in the nature of composite contracts, mainly piling works, and relied on various legal precedents to support their case. They provided evidence showing the use of materials other than cement and steel, establishing the composite nature of the contracts. The Tribunal found that the contracts were indeed composite in nature, applying the decision in the case of Larsen & Toubro Ltd. for the period prior to 01.06.2007 and the decision in the case of Real Value Promoters for the period after. Consequently, the demand under CICS could not be sustained for either period.

2. Liability of sub-contractor to pay service tax:
The appellant contested the demand raised against them as a sub-contractor, citing a Larger Bench decision that held sub-contractors liable to pay service tax. However, they argued that there was no evidence of suppression of facts on their part to evade tax, making the invocation of the extended period for demand unsustainable. The Tribunal agreed with the appellant, emphasizing that the issue was interpretational and not a case of intentional suppression. Ultimately, the Tribunal ruled in favor of the appellant, setting aside the demand.

3. Invocation of extended period for demand raised:
The department argued that the extended period was rightly invoked due to the appellant's liability as a sub-contractor and alleged suppression of facts. However, the Tribunal found no evidence of intentional suppression and concluded that the demand could not be sustained. The department's reliance on a previous decision regarding sub-contractor liability was deemed irrelevant in this case. After considering all evidence and submissions, the Tribunal allowed the appeal and provided consequential relief to the appellant.

In conclusion, the Tribunal found in favor of the appellant, setting aside the demand under CICS for both periods and rejecting the invocation of the extended period for demand raised. The judgment highlighted the importance of establishing the composite nature of contracts and the absence of intentional suppression of facts in tax-related matters.