2023 (8) TMI 56 - AT - Service Tax

Classification of service - works contract - It is the contention of the appellant that they have rendered services relating to roads, bridges, railways, dams etc. which are not taxable services, but it is alleged that appellants were engaged in the Commercial Industrial Construction Services - HELD THAT - It is found that all the agreements under which the works has been executed by the appellant are relating to roads, bridges, railways, dams etc. and appellant was also registered as works contractor with Bihar Government w.e.f. 31.07.1991. In that circumstances, if registered as works contractor and as per the tenor of the agreements, the appellant is paying State Tax on the supply part of the contract amount, in that circumstances, the correct classification of the services in question is Works Contract Services . During the impugned period, i.e. September 2003 to December 2007 and there is no proposal to demand Service Tax from the appellant under Works Contract Services . Particularly prior to 01.06.2007, the Works Contract Services was not a taxable services, therefore, as held by the Hon ble Apex Court in the case ofCOMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , it is held by the Hon ble Apex Court that prior to 01.06.2007, the Works Contract Services was not into the statute book, therefore, no service tax is payable on the Works Contract Service prior to 01.06.2007. Further, post 01.06.2007, there is no proposal to demand Service Tax form the appellant under Works Contract Services therefore, no service tax is payable by the appellant under Commercial Industrial Construction Services . Thus, whole of the demand is not sustainable in the eyes of law and the same are classifiable under Works Contract Services . Appeal allowed.

Summary

Issues involved:
The judgment involves the confirmation of demand of Service Tax against the appellant under the categories of 'Commercial & Industrial Construction Services' and 'Management, Maintenance & Repair Services'.

Details of the judgment:

Issue 1: Classification of services under 'Works Contract Services'
The appellant, a Govt. of India Undertaking, entered into various agreements for construction works like roads, bridges, railways, and dams. The appellant was registered as a works contractor with the Bihar Government and paid State Tax on the supply part of the contract amount. The Tribunal observed that during the impugned period, 'Works Contract Services' were not taxable services. Citing the case of CCE & C, Kerala v. Larsen & Toubro Ltd., the Tribunal held that no service tax is payable on 'Works Contract Services' prior to 01.06.2007. Post that date, there was no proposal to demand Service Tax from the appellant under 'Works Contract Services'. Therefore, the Tribunal concluded that the correct classification of the services in question is 'Works Contract Services', and no service tax is payable under 'Commercial & Industrial Construction Services'.

In view of the above observations, the Tribunal held that the demand was not sustainable in the eyes of the law and classified the services under 'Works Contract Services'. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

*(Operative part of the order was pronounced in the open Court.)*