2022 (4) TMI 1107 - AT - Service Tax

Entitlement to abatement form service tax - composite contract or not - abatement of 67% from the gross amount received for commercial construction services from the Nagar Palika - HELD THAT - Learned Counsel for the appellant has, however, drawn attention to the tender document of Nagar Palika dated 24.12.2007, work order dated 25.01.2008 and the assessment orders of the commercial tax authority of the State Government for the period 2007-2008 and 2008-2009. However, none of these documents establish that the amount which the appellant received was for composite contract for supply/deemed supply of materials and rendering services. The mere fact that the commercial tax authority had assessed the appellant for commercial tax does not prove that the assessment was towards part of the amount received under this contract for which it received consideration for construction services. The tender document also cannot be co-related with the receipts by the appellant. The work order dated 25.01.2008 submitted by the appellant also does not indicate that the appellant is supposed to supply any goods or used goods. Therefore, the Commissioner (Appeals) was correct in not allowing the abatement of 67% from the gross receipts from the Nagar Palika. However for the financial year 2008-2009, even if the gross receipts are considered the total receipts fall below the threshold limit of ₹ 10,00,000/- during the financial year. Therefore, no service tax can be levied for the financial year 2008-2009. The demand accordingly needs to be set aside for this financial year. No interest or penalty can consequently to be levied for this financial year. The impugned order is modified by setting aside the demand for the year 2008-2009 along with interest and the penalties imposed under Sections 76 and 78 for this period. The remaining part of the impugned order is upheld - Appeal disposed off.

Summary

Issues:
1. Service tax demand for the period 2007-2008 to 2008-2009.
2. Abatement claim for commercial construction services.
3. Threshold exemption limit for charging service tax.

Service Tax Demand for 2007-2008 to 2008-2009:
The appellant, engaged in maintenance and repair services, contested the service tax demand of ?3,02,906/- for the period 2007-2008 to 2008-2009. The Deputy Commissioner confirmed the demand along with interest and penalties under Sections 76, 77, and 78 of the Finance Act. The Commissioner (Appeals) upheld this order, leading to the appellant's appeal.

Abatement Claim for Commercial Construction Services:
The appellant claimed a 67% abatement for gross receipts from commercial construction services, arguing that a significant portion was towards the cost of materials. However, the appellant failed to provide evidence supporting this claim. Both the Original Authority and the Commissioner (Appeals) found the appellant's documentation insufficient to justify the abatement. Despite producing tender documents and assessment orders, the appellant could not establish that the receipts included material costs. Consequently, the abatement claim was rejected.

Threshold Exemption Limit for Charging Service Tax:
For the financial year 2008-2009, the appellant's total receipts fell below the threshold limit of ?10,00,000. As a result, no service tax could be levied for this year. The Tribunal modified the impugned order, setting aside the demand, interest, and penalties for the financial year 2008-2009. The remaining aspects of the order were upheld, providing consequential relief to the appellant.

In conclusion, the Tribunal dismissed the abatement claim due to lack of evidence, but exempted the appellant from service tax for the financial year 2008-2009 as the total receipts were below the threshold limit. The decision emphasized the importance of substantiating claims with proper documentation in tax-related matters.