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2023 (5) TMI 198 - AT - Service TaxClassification of services - activity of construction of office buildings, erection of cell phone towers and other connected civil structures for M/s. BSNL, Tiruchirappalli, Airport Authority of India and M/s. Life Insurance Corporation of India - construction of school buildings for the State Public Works Department - construction service under Section 65(30a) of the Finance Act, 1994 with effect from 10.09.2004, under commercial or industrial construction service under Section 65(25b) of the Finance Act with effect from 16.06.2005 and under works contract service under Section 65(105)(zzzza) of the Finance Act with effect from 01.06.2007 - liability to pay Service Tax towards the cleaning activity provided by them during the period from 2005-06 to 2008-09 - extended period of limitation - penalty. HELD THAT - The issue of taxability of composite contracts before 01.06.2007 has been considered by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , which ratio has been followed by the Chennai Bench of the CESTAT in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI - In the case of M/s. Real Value Promoters Pvt. Ltd., it has been held that demand of Service Tax under construction service and commercial or industrial construction service in respect of composite contracts up to 01.06.2007 is not sustainable. The appellant has admitted that the services rendered by them are taxable under works contract service with effect from 01.06.2007 in the grounds-of-appeal and also before the lower authority. As the activities undertaken by the appellant were in the nature of works contract, the demands raised under construction service and commercial or industrial construction service till 31.05.2007 are not sustainable - the appellant is required to pay Service Tax of Rs.1,82,467/- towards works contract service during the period from June 2007 to March 2008 (as detailed in Annexure-IV-A to the Show Cause Notice) and Rs.8,50,546/- towards works contract service during the period from April 2008 to March 2009 (as detailed in Annexure-V to the Show Cause Notice). Cleaning activity - HELD THAT - The appellant is liable to pay Service tax of Rs.14,531/- towards cleaning activity provided by them during the period from 2005-06 to 2008-09, which is not disputed. Extended period of limitation - HELD THAT - Though the appellant has taken registration in 2004, they have not paid Service Tax on the considerations received for the services rendered to M/s. BSNL, Airport Authority of India and M/s. LIC. The non-payment of Service Tax by the appellant has been detected and investigated by the Anti-evasion Unit of the Commissionerate and as such, the extended period has been rightly invoked in this case. Penalty - HELD THAT - The appellant is liable to pay penalty of Rs.5,000/-, as imposed under Section 77 of the Finance Act, 1994 and penalty equivalent to the amount of Service Tax payable towards works contract service and cleaning activity, under Section 78 of the Act. The demand of Service Tax from October 2004 up to 31.05.2007 under construction service and commercial or industrial construction service are required to be set aside. However, the demand of Service Tax under works contract service with effect from 01.06.2007 is held to be payable under the provisions of Section 73(1) of the Finance Act, 1994, along with applicable interest under Section 75 of the Finance Act, 1994 - Appeal allowed in part.
Issues Involved:
1. Taxability of services rendered under construction service, commercial or industrial construction service, and works contract service. 2. Liability to pay Service Tax for cleaning activity. 3. Justification for invocation of extended period of limitation and imposition of penalties. Summary of Judgment: 1. Taxability of Services Rendered: The appellant, a civil contractor, was alleged to have provided services such as construction of office buildings, erection of cell phone towers, and other civil structures without paying Service Tax from October 2004 to March 2009. The Joint Commissioner classified these services under 'construction service' from 10.09.2004, 'commercial or industrial construction service' from 16.06.2005, and 'works contract service' from 01.06.2007, confirming the Service Tax demands and penalties. The Tribunal referred to the Supreme Court ruling in M/s. Larsen & Toubro Ltd., which held that composite contracts involving transfer of property in goods could not be taxed under 'construction service' or 'commercial or industrial construction service' before 01.06.2007. Consequently, the Tribunal set aside the Service Tax demand for the period up to 31.05.2007 but upheld the demand under 'works contract service' from 01.06.2007 onwards. 2. Liability to Pay Service Tax for Cleaning Activity: The appellant was also alleged to have provided cleaning services from 2005-06 to 2008-09 without paying Service Tax. The Tribunal upheld the demand of Rs.14,531/- for the cleaning activity as it was not disputed by the appellant. 3. Justification for Invocation of Extended Period of Limitation and Imposition of Penalties: The appellant had taken registration in 2004 but did not pay Service Tax or file returns for the services rendered. The Anti-evasion Unit detected this non-compliance, justifying the invocation of the extended period of limitation. The Tribunal upheld the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, including a penalty of Rs.5,000/- and an amount equivalent to the Service Tax payable for works contract service and cleaning activity. Conclusion: The Tribunal modified the impugned order by setting aside the Service Tax demand for the period up to 31.05.2007 under 'construction service' and 'commercial or industrial construction service.' However, it upheld the demand under 'works contract service' from 01.06.2007 and the cleaning activity, along with applicable interest and penalties. The appeal was partly allowed.
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