2022 (5) TMI 483 - AT - Service Tax

Classification of services - Erection, Commissioning and Installation or Works Contract Services? - appellant was engaged in providing Erection, Commissioning and Installation Services relating to petrol pumps for Indian Oil Corporation - non production of the requisite documents by the appellant - extended period of limitation - HELD THAT - From the record, it is apparent that service tax returns have repeatedly been filed by the appellant for the period from 2008-09 to 2012-13, specifically mentioning the nature of services as that of works contract service. The appellant vide letter dated 9.7.2009 and 22.6.2011 has informed the Superintendent Range II Jaipur about opting to pay tax under Rule 3 of Work Contract (Composition Scheme for Payment of Service Tax) Rules 2007 along with an undertaking for not taking the Cenvat Credit on duties or cess paid on the inputs used in or in relation to the said work contract. It is not the case of the Department that the said undertaking has been violated by the appellant. Further, it is observed that it has specifically been mentioned since the stage of replying to the show cause notice till filing of the appeal before this Tribunal that the main activity undertaken by the appellants was appellants was installation of tanks, dispensing pumps and other equipments for setting up new petrol pump / retail outlet. Department has produced no document to falsify this submission of the appellant. From the appeal filed herein before this Tribunal, it is observed that the non submission of the requisite documents as that of contract, etc. was because of all documents being taken in possession by the Department at the time when anti-evasion had resumed the work contract vide resumption memo dated 23.9.2013 (the documents under the name of panchnama dated 23.9.2013 is found annexed in the file) - in view of the said document it is clear that work contracts, for want whereof the demand has been confirmed by Commissioner (A), were not in possession of appellant since September 2013, rather had been in Department s own possession. The production thereof was not possible for the appellant, whereas the Commissioner (A) had all opportunity to summon the said record instead of confirming the proposed demand for want of the said documents. From the submissions of the appellant about the nature of the contract, and in absence of any evidence to falsify the same, it is opined that the contracts awarded to the appellant, were in the nature of works contract services. Since the contracts are mentioned to be inclusive of installation of tanks, pumps / equipments, etc. the contracts are held to be in the nature of works contract only. The services provided by the appellant since involve the goods also which are leviable to sales tax / VAT, the contracts in question are definitely in the nature of works contract. Even if those being the contracts for Erection, Commissioning and Installation service. Since, the property in goods is also involved in rendering the said services, the appellant was entitled for the benefit of abetment of 67% under notification no. 19 of 2013 dated 21.8.2003. The appellant was entitled for exemption of 67% or the gross amount charged as the same was including the value of the pumps, plants and other equipments, etc. - there appears no liability of the appellant as was proposed vide the impugned show cause notice and as has been confirmed by Commissioner (A) who no doubt has been given the benefit of 67% abetment. The findings of Commissioner (Appeals) therefore are opined to rather be contradictory in nature. Extended period of limitation - HELD THAT - The question of invoking the extended period of limitation also does not arise in the present case as apparently and admittedly appellant is a registered service provider and was regularly submitting the ST-3 returns with no objection by the Department except for the impugned show cause notice, No suppression of facts or malafide intent to evade duty can be attributed to the appellant. Hence, no occasion for the Department to invoke the proviso of Section 73 of the Finance Act. Appeal allowed.

Issues Involved:
1. Classification of services: Whether the services rendered by the appellant fall under "Erection, Commissioning and Installation Services" or "Works Contract Services."
2. Non-submission of requisite documents: Impact of the appellant's failure to provide contract documents.
3. Entitlement to abatement benefits under Notification No. 1/2006.
4. Invocation of the extended period of limitation.
5. Confirmation of the demand and penalties imposed.

Detailed Analysis:

1. Classification of Services:
The primary issue is whether the services rendered by the appellant are classified as "Erection, Commissioning and Installation Services" or "Works Contract Services." The appellant is registered for both types of services. The adjudicating authority classified the services under "Erection, Commissioning and Installation" due to the non-production of contract documents by the appellant. However, the appellant consistently mentioned the nature of services as "Works Contract Services" in their tax returns and communicated their intent to pay tax under the Works Contract (Composition Scheme for Payment of Service Tax) Rules 2007, without taking Cenvat Credit on inputs. The Tribunal found that the contracts involved installation of tanks, pumps, and other equipment for petrol pumps, which falls under the definition of "Works Contract" as per Section 65B (54) of the Service Tax Act.

2. Non-submission of Requisite Documents:
The demand was confirmed due to the appellant's failure to provide contract documents. However, the Tribunal noted that the documents were seized by the Department during an anti-evasion operation and were not in the appellant's possession. The Tribunal held that the Commissioner (A) should have summoned the documents instead of confirming the demand. The Tribunal accepted the appellant's submission that the contracts were in the nature of works contracts, as the Department did not provide any evidence to the contrary.

3. Entitlement to Abatement Benefits:
The appellant argued for the abatement of 67% under Notification No. 1/2006, as the contracts involved goods liable to sales tax/VAT. The Tribunal found that the appellant was entitled to this benefit since the contracts included the value of pumps, plants, and other equipment. The Tribunal referenced previous decisions where similar contracts were classified under "Works Contract Services" and were eligible for abatement or composition benefits. The Tribunal noted that the Commissioner (A) had allowed the abatement but found the findings contradictory.

4. Invocation of the Extended Period of Limitation:
The Tribunal held that the extended period of limitation was wrongly invoked. The appellant was a registered service provider and regularly submitted ST-3 returns without any objections from the Department until the impugned show cause notice. There was no suppression of facts or malafide intent to evade duty, thus the proviso of Section 73 of the Finance Act could not be invoked.

5. Confirmation of the Demand and Penalties Imposed:
The Tribunal set aside the order under challenge, noting that the services provided were in the nature of works contracts and the appellant was entitled to the abatement benefits. The Tribunal also referenced previous decisions where penalties were waived under similar circumstances. The demand was limited to the normal period, and penalties were waived in terms of Section 80 of the Finance Act.

Conclusion:
The Tribunal concluded that the services provided by the appellant were "Works Contract Services" and the appellant was entitled to the abatement benefits. The invocation of the extended period of limitation was not justified, and the penalties imposed were waived. The order under challenge was set aside, and the appeal was allowed.

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