2019 (11) TMI 1336 - AT - Service Tax

Commercial or Industrial Construction Services - short payment of service tax - period October 2004 to May 2007 - Works Contract Services for the period June 2007 to March 2008 - period involved is prior to 01.06.2007. HELD THAT - The demand under Commercial or Industrial Construction Services cannot sustain for the period prior to 01.06.2007 as per the decision of the Hon ble Apex Court in the case of Larsen and Toubro Ltd 2015 (8) TMI 749 - SUPREME COURT - The demand for this period therefore requires to be set aside. Demand for the period June 2007 to March 2008 - Works contract services - HELD THAT - The department has confirmed the demand under works contract services, applying the rate of service tax as 4.12%. During the relevant period i.e. prior to 01.04.2008, the rate of service tax is 2%. The appellant has filed returns by calculating the tax at the rate of 2% - the demand made by the department applying the rate aa 4.12% cannot sustain. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand for short payment of service tax under Commercial or Industrial Construction Services for the period October 2004 to May 2007.
2. Demand for payment under Works Contract Services for the period June 2007 to March 2008.

Analysis:
The appellant, a proprietary concern registered with the service tax department for construction services, received a show-cause notice alleging short payment of service tax under Commercial or Industrial Construction Services for the period October 2004 to May 2007, and demanding payment under Works Contract Services for the period June 2007 to March 2008. The original authority confirmed the demand, interest, and imposed penalties, which was upheld by the Commissioner (Appeals), leading to the appeal.

Regarding the demand for the period October 2004 to May 2007 under Commercial or Industrial Construction Services, the appellant's counsel argued that the demand cannot be sustained based on a decision of the Hon'ble Apex Court in a specific case. The Tribunal agreed with this submission and set aside the demand for this period.

Concerning the demand for the period June 2007 to March 2008 under Works Contract Services, the department had applied a service tax rate of 4.12%, whereas the correct rate during that period was 2%. The appellant had correctly paid the tax at the rate of 2% as per the returns filed. The Tribunal found the department's application of the higher rate erroneous and set aside the demand for this period as well.

In conclusion, the Tribunal held that the entire demand could not be sustained. Therefore, the impugned order was set aside, and the appeal was allowed with consequential reliefs. The judgment was pronounced and dictated in open court by the members of the Tribunal.