2022 (1) TMI 393 - AT - Service Tax

Levy of service tax - construction service or not - commercial service rendered by the appellant for construction of Paryatak Bhavan of the Andhra Pradesh Tourism Development Corporation Ltd. - suppression of facts or not - penalty - whether service tax could be levied for the period prior to 01.06.2007? - HELD THAT - Service tax could only have been demanded on works contract services after introduction of a charge on a works contract service and not under any other head. This is what was observed by the Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT . The Supreme Court examined as to whether works contract service can be classified under section 65(105)(zzzh) as construction of complex service and held that the scope of section 65(105) (zzzh) is limited to cover contract of service simplicitor only and not a composite works contract . The Supreme Court noticed that a works contract is different from a contract for service simpliciter and that it is only w.e.f 01.06.2007 that section 65(105)(zzzza) was introduced to cover composite works contract and so works contract cannot be covered under any other category of services prior to 01.06.2007. It is, therefore, clear from the aforesaid judgment of the Supreme Court in Larsen Toubro that a composite works contract cannot be taxed under construction services under section 65(30a) or under commercial or industrial construction service under section 65(25b) of the Finance Act, prior to 01.06.2007 as the scope is limited to cover contract of service simplicitor only - Even post 01.06.2007 service tax could not have been confirmed under works contract service. The show cause notice alleged that the appellant was providing construction services or commerical or industrial construction service and the demand has also been confirmed under this category by the adjudicating authority. The impugned order, therefore, deserves to be set aside for post 01.06.2007 period also since the demand made under a particular category of service found to be incorrect in a subsequent proceeding, cannot be sustained. It is not necessary to examine the contention raised by learned counsel for the appellant relating to the demand being barred by limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether service tax could be levied for the period prior to 01.06.2007.
2. Whether service tax could be confirmed under 'works contract' service post 01.06.2007.
3. Whether the demand made under a particular category of service found to be incorrect in a subsequent proceeding can be sustained.

Issue 1:
The first issue pertains to the levy of service tax for the period before 01.06.2007. The appellant contended that the services provided were 'works contract' services and could only be taxed after 01.06.2007 under section 65(105)(zzzza) of the Finance Act. The Supreme Court's judgment in Commissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. was cited to support this argument. The Tribunal observed that 'works contract' services were only taxable post 01.06.2007, as per the specific provisions introduced in the Finance Act. The judgment emphasized that prior to this date, 'works contract' services could not be taxed under any other category, as clarified by the Supreme Court.

Issue 2:
The second issue revolves around the confirmation of service tax under 'works contract' service post 01.06.2007. The Department alleged that the appellant provided 'construction services' or 'commercial or industrial construction service,' leading to the demand being confirmed under this category. However, the Tribunal noted that the demand made under a specific service category found to be incorrect in a subsequent proceeding cannot be sustained. Citing the Supreme Court's decision in Hindustan Polymers Company Limited vs. Collector of Central Excise, the Tribunal emphasized the importance of aligning the demand with the precise case made by the Revenue. The judgment highlighted that incorrect categorization of services could not be upheld in subsequent proceedings.

Issue 3:
The final issue addresses whether a demand made under a particular category of service, later found to be incorrect, can be sustained. The Tribunal, based on legal precedents, concluded that the order passed by the Commissioner confirming the demand could not be upheld. Referring to the Supreme Court's decisions in Reckitt & Colman of India Limited vs. Collector of Central Excise, the Tribunal stressed the need for demands to align with the case presented by the Revenue. Consequently, the Tribunal set aside the order dated 30.03.2010 passed by the Commissioner, thereby allowing the appeal.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Hyderabad underscores the legal intricacies surrounding the levy and confirmation of service tax under different service categories, emphasizing the critical importance of aligning demands with the specific provisions of the Finance Act and legal precedents established by the Supreme Court.