2022 (1) TMI 382 - HC - Service Tax

Levy of service tax - Toll Plaza - Lay-bys - Pedestrian/Cattle Crossing - Highway traffic management Systems - Administrative, operation and maintenance of Base camp - Highway lighting, landscaping road furniture and facility road side, as part of the road construction having no separate existence and are meant only for the purpose of road - extended period of limitation - works contract service - construction service - penalties - HELD THAT - In COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, MYSORE PRESENTLY COMMISSIONER OF CUSTOMS NEW CUSTOMS MANGALORE VERSUS M/S. SUCH SILK INTERNATIONAL LTD., 2021 (10) TMI 1134 - KARNATAKA HIGH COURT , the Co-ordinate Bench of this Court (where one of us, the Hon ble SSJ was a member) having considered this ruling of the Hon'ble Apex Court as well as the other judgments holding the field held that the subject matter of the appeal which certainly goes beyond the inter-se dispute between the parties and would partake the character of general public importance as enunciated by the Hon'ble Apex Court in COMMISSIONER OF CUSTOMS, BANGALORE-1 VERSUS M/S MOTOROLA INDIA LTD. 2019 (9) TMI 229 - SUPREME COURT , would not be maintainable before the High Court in an appeal under Section 130 of the Customs Act, 1962. The substantial questions of law raised by the Revenue ultimately goes to the root of the matter inasmuch as liability to service tax and classification of service, finally resulting in the determination of rate of tax - the appeal is not maintainable before this Court under Section 35G of the Act - Appeal dismissed.

Summary

Issues:
1. Whether various components of road construction are liable to service tax?
2. Whether the extended period of limitation is applicable?
3. Classification of service under 'works contract service' or 'construction service'?
4. Validity of penalties imposed.

Analysis:

1. The appeal was filed by the Revenue challenging the Tribunal's order regarding the liability of service tax on components like Toll Plaza, Lay-bys, Pedestrian/Cattle Crossing, etc., as part of road construction. The Tribunal held that these components, being part of the road and having no separate existence, are not liable to service tax. The issue revolved around the interpretation of the law concerning the scope of service tax on such components within the context of road construction.

2. Another issue raised was the invocation of the extended period of limitation. The Tribunal's decision not to invoke the extended period was challenged. This involved a legal analysis of the time limitations for tax assessments and whether the Tribunal's decision was in accordance with the provisions of the Act.

3. The classification of service under 'works contract service' or 'construction service' for a specific period was disputed. The Tribunal classified the service under 'works contract service' defined in the Act, while the Revenue contended it should be classified as 'construction service'. This issue required a detailed examination of the definitions and implications of these classifications under the relevant provisions of the Act.

4. The final issue pertained to the setting aside of penalties by the Tribunal. The Tribunal's decision to annul the penalties imposed was challenged. This issue involved an assessment of the legal basis for imposing penalties, the Tribunal's authority to set them aside, and whether such actions were justified under the law.

In the judgment, the Court dismissed the appeal by the Revenue on the grounds of maintainability, citing precedents and legal principles. The Court referred to relevant judgments, including the conditions for admitting appeals under specific sections of the Customs Act. The Court analyzed the nature of the questions raised in the appeal and concluded that they did not meet the criteria for adjudication under Section 35G of the Act. Therefore, the appeal was deemed not maintainable before the High Court, with the option given to the Revenue to present the appeal before the Supreme Court under a different section of the Central Excise Act.