2021 (8) TMI 1224 - AT - Service Tax

Levy of service tax - Work Contract Services - HELD THAT - Undisputedly, the services provided by the appellant were contract services as the invoices are supply of material alongwith services. The issue is squarely covered by the decision of the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT where it was held that Works contract were not chargeable to service tax prior to 1.6.2007. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of service tax and education cess under Section 68 of the Finance Act, 1994.
2. Recovery of interest for delayed tax payment under Section 75 of the Finance Act, 1994.
3. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
4. Failure to file ST-3 return on time.
5. Applicability of service tax on Work Contract Services.

Analysis:

Issue 1:
The appellant challenged the order confirming the service tax and education cess under Section 68 of the Finance Act, 1994. The Commissioner (Appeals) upheld the original order for recovery. The appellant deposited a partial amount towards the tax liability. The Tribunal found that the services provided by the appellant were contract services involving supply of material and services. Citing the decision of the Hon'ble Supreme Court in the case of Larsen & Toubro Ltd., the Tribunal allowed the appeal in favor of the appellant, stating that there is no machinery to levy service tax on indivisible composite works contracts.

Issue 2:
Regarding the recovery of interest for delayed tax payment under Section 75 of the Finance Act, 1994, the Tribunal acknowledged the payment made by the appellant towards interest. However, the Tribunal's decision to allow the appeal in favor of the appellant rendered the recovery of interest moot.

Issue 3:
The Tribunal did not impose penalties under Sections 76 and 77 of the Finance Act, 1994. A penalty of ?1,000 was imposed under Section 77 for the failure to file the ST-3 return on time. Additionally, a penalty of ?9,74,412 was imposed under Section 78, which was later adjusted based on the Tribunal's decision to allow the appeal.

Issue 4:
The imposition of a penalty of ?1,000 under Section 77 for the failure to file the ST-3 return on time was upheld by the Tribunal. The appellant's failure to file the return as per the due date led to this penalty.

Issue 5:
The issue of the applicability of service tax on Work Contract Services was raised during the appeal. The appellant argued that the Hon'ble Supreme Court's decision in the case of CCE & Cus. vs. Larsen & Toubro Ltd. supported their case. The Tribunal agreed with the appellant, citing the Supreme Court's decision and allowed the appeal in favor of the appellant, granting them consequential benefits as per the law.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision on each matter, ensuring a thorough understanding of the legal aspects and implications of the case.