2019 (12) TMI 476 - HC - Service Tax

Completion and finishing services - Service tax not paid - re-classification of services - Whether the Tribunal can allow the party to retreat from their earlier stand of paying Service tax under a certain category after claiming the benefit of abatement? - approbation and reprobation on the same issue allowed or not - HELD THAT - The subject matter in this appeal as also the substantial questions of law, already stand adjudicated by this Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, PANCHKULA VERSUS M/S SATISH KUMAR CONTRACTOR LTD., PANCHKULA 2019 (4) TMI 1008 - PUNJAB AND HARYANA HIGH COURT wherein this Court while relying on the decision of Hon ble Supreme Court in Lassen Tourbo Ltd. s case 2015 (8) TMI 749 - SUPREME COURT set aside the service tax demand upto 30.05.2007 and confirmed the same only from 01.06.2007, holding that respondent was providing the services of construction with material and the amount and the material supplied cannot be vivisected. Therefore, the respondent was not liable to pay service tax prior to 1.6.2007 in view of the decision of the Apex Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT . The subject matter of this appeal is squarely covered by the ratio of judgment reproduced above and therefore, no illegality or perversity could be pointed out in the order passed by the Tribunal which may warrant interference by this Court. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of provisions under the Central Excise Act, 1944 and Finance Act, 1994 regarding service tax liability.
2. Allowance of party to change stand on service tax category after claiming abatement.
3. Applicability of the doctrine of approbate and reprobate in tax matters.

Analysis:
1. The appeal under Section 35G of the Central Excise Act, 1944 challenged a Final order passed by the Customs, Excise and Service Tax Appellate Tribunal regarding the demand of service tax from the respondent for the period 10.09.2004 to 31.05.2007. The respondent was alleged to have provided construction services taxable under the category of 'construction services' but had not paid service tax. The Commissioner confirmed the demand, leading to the appeal.

2. The key questions of law were whether the Tribunal could allow the respondent to retract from their initial stand on paying service tax under a specific category after claiming abatement, and whether the respondent could engage in approbate and reprobate on the same issue. The Tribunal allowed the appeal, considering the activities as falling under 'work contract service' chargeable from 01.06.2007, leading to the current challenge.

3. The appellant argued that the Tribunal erred in setting aside the service tax demand up to 31.05.2007, while the respondent contended that the decision was correct based on the Supreme Court ruling in a similar case. The Court referred to a previous judgment involving similar issues where it was held that the respondent was not liable to pay service tax before 01.06.2007 based on the nature of the services provided and the applicable legal provisions.

4. The Court reiterated the earlier judgment's findings, emphasizing the distinction between the service and goods components in a works contract for service tax purposes. It highlighted the constitutional compliance required in determining the service element in such contracts and the importance of following prescribed rules for computation. The Court dismissed the appeal, stating that the Tribunal's decision was in line with legal principles and did not warrant interference.

5. Ultimately, the Court upheld the Tribunal's decision, finding no legal basis to overturn it based on the established legal principles and the interpretation of relevant provisions under the Central Excise Act and Finance Act. The judgment provided clarity on the service tax liability of the respondent and affirmed the application of the law in similar tax matters.