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2021 (2) TMI 400 - AT - Service TaxWorks Contract - Classification of services - Scope of Show Cause Notice (SCN) - whether the projects undertaken by the appellant would fall in the classification alleged in the show cause notices or would be more appropriately classifiable under works contract , if the contracts involved both goods as well as services? - HELD THAT - The Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT noted that a works contract is different from a contract for service simpliciter and could be subjected to service tax only with effect from June 1, 2007. The Commissioner has recorded a categorical find that each of the works contract undertaken by the appellant are not covered under the three services namely (i) commercial or industrial construction, (ii) construction of complex and (iii) management, maintenance or repair mentioned in the first show cause notice. The Commissioner further recorded a categorical finding that the activities undertaken by the appellant would be classifiable as works contract as they involved goods as well as labour services - The Commissioner therefore, dropped the demand for the period prior June 1, 2007. But for the demands for the period w.e.f. June 1, 2007 the Commissioner proceeded to examine whether the particular work performed under works contract is exempted from levy of service tax under Notifications issued from time to time. A Division Bench of the Tribunal in M/S GURJAR CONSTRUCTION VERSUS COMMISSIONER CENTRAL EXCISE, JAIPUR-II 2019 (5) TMI 717 - CESTAT NEW DELHI also examined such a position and observed that a demand made under a particular category cannot be sustained under a different category - In view of the aforesaid decisions of the Tribunal, it has to be held that the Commissioner was not justified in confirming the demand of service tax under the category of works contract for the period post June 1, 2007 even if the levy of service tax was not exempted under Notifications, since, the show cause notice that demand it service tax under the three categories namely (i) commercial or industrial construction, (ii) construction of complex and (iii) management, maintenance or repair. The order dated January 31, 2018 passed by the Commissioner that has confirmed the demand of service tax, therefore, deserves to be set aside and is set asid - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of services provided by the appellant. 2. Taxability of services prior to June 1, 2007. 3. Taxability of services post-June 1, 2007. 4. Validity of demand under a different service category than proposed in the show cause notice. Detailed Analysis: 1. Classification of Services Provided by the Appellant: The appellant, engaged in commercial construction and management, maintenance, and repair, received two show cause notices for different periods. The first show cause notice dated October 13, 2011, covered the period from 2006-07 to 2010-11, and the second show cause notice dated March 24, 2014, covered the period from 2011-12 to 2012-13. The Commissioner categorized the appellant’s activities into eight groups, each with a specific service category and taxability status, such as "Commercial Construction Service" and "Maintenance & Repair." 2. Taxability of Services Prior to June 1, 2007: The Tribunal had previously directed the Adjudicating Authority to exclude demands on "works contract" prior to June 1, 2007, following the Supreme Court’s decision in Commissioner of Central Excise and Customs, Kerala vs. Larsen and Toubro Ltd. The Commissioner, upon re-examination, confirmed that the activities of the appellant were classifiable as "works contract" and not under the categories mentioned in the show cause notices. Consequently, the demands for the period prior to June 1, 2007, were dropped, as "works contract" services were not taxable before this date. 3. Taxability of Services Post-June 1, 2007: For the period post-June 1, 2007, the Commissioner examined whether the services were exempt under any notifications. The Commissioner confirmed that if the services were not exempt, they would be taxable under "works contract" service. However, the appellant argued that the demand could not be confirmed under "works contract" since the show cause notices did not propose this category. 4. Validity of Demand Under a Different Service Category: The Tribunal considered whether a demand raised under one service category could be confirmed under a different category. It referred to several decisions, including Ashish Ramesh Dasarwar vs. Commissioner of Central Excise & Service Tax, Nagpur, which held that demands raised under an incorrect service category could not be sustained. The Tribunal concluded that the Commissioner was not justified in confirming the demand under "works contract" for the period post-June 1, 2007, since the show cause notices proposed different categories. Conclusion: The Tribunal set aside the order dated January 31, 2018, passed by the Commissioner. It held that the demand of service tax could not be confirmed under "works contract" for the period post-June 1, 2007, as the show cause notices did not propose this category. The appeal was allowed, and the demand was set aside. (Dictated and pronounced in the open Court)
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