2020 (3) TMI 82 - AT - Service Tax

Refund of Service Tax erroneously paid - sob-contractor - main contractor having refused to pay the Service Tax on the ground that the services relating to construction of road were covered under the category of Works Contract Service which was exempt - HELD THAT - In the case of PHOENIX ENGINEERING VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR, 2015 (12) TMI 749 - CESTAT MUMBAI the Mumbai Bench of the Tribunal has considered a more or less similar situation has held that All these activities have been retrospectively exempted either by way of notification or by means of a specific provision in the Finance Act itself and therefore, the activities undertaken by the appellant is either exempted or falls outside the purview of the taxable services. In the case on hand, there is no dispute as regards the appellant rendering services to M/s. GMR SPV in the capacity of a sub-contractor with the main contractor rendering the services of construction of roads, which included installation of Highway Traffic Management System, Toll Management System, etc., to ensure complete functioning of the road in all respects - the nature of service being Works Contract, is clearly exempt since the service is provided only towards the construction of road and not for the benefit of any of the parties. The rejection of refund is not in order - Appeal allowed - decided in favor of assessee.

Summary

Issues:
Refund of Service Tax erroneously paid

Analysis:
The appellant sought a refund of Service Tax erroneously paid, which was not entertained by the lower authorities. The appellant provided services of erection, commissioning, or installation for communication systems in toll plazas as a sub-contractor. The main contractor refused to pay Service Tax, claiming the services were exempt under Works Contract Service. The appellant filed a refund claim, which was rejected by the Adjudicating Authority and the First Appellate Authority. The appellant then appealed to the CESTAT Chennai.

The appellant argued that the issue was settled based on decisions from the Delhi and Mumbai Benches of the Tribunal. The Authorized Representative for the Revenue supported the lower authorities' findings. The Tribunal considered similar cases from the Mumbai and Delhi Benches. The Mumbai Bench found that the activities undertaken by the appellant were exempt or fell outside taxable services, setting aside the demand. Similarly, the Delhi Bench ruled that services provided for maintenance and repair of roads were exempt from Service Tax, and demand related to construction of Toll Plaza and Lanes was not sustainable.

The Tribunal observed that the appellant's services were provided as a sub-contractor for the construction of roads, including various systems to ensure road functionality. The nature of service being Works Contract was deemed exempt since it was solely for the construction of roads. The Tribunal concluded that the rejection of the refund was incorrect and allowed the appeal, granting consequential benefits as per the law.

In conclusion, the Tribunal allowed the appeal for the refund of Service Tax erroneously paid, based on the nature of the services provided by the appellant as a sub-contractor for the construction of roads, which fell under the exempt category of Works Contract Service.