2023 (9) TMI 1008 - AT - Service Tax

Non-payment of service tax - non-filing of service tax return - construction of residential complex service - works contract or not - Period prior to 01.06.2007 - HELD THAT - The period involved in the above appeal is clearly prior to 01.06.2007 and there is also no dispute that the nature of service alleged to have been rendered by the appellant was works contract. 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 has observed Works contract were not chargeable to service tax prior to 1.6.2007. In view of the above specific decision and the undeniable claim of the appellant that what they provided was only works contract service, no tax is liable to be demanded on the construction contracts executed prior to 01.06.2007. Consequently, the impugned order, which cannot sustain, is set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are whether the appellant is liable to pay Service Tax on the construction of a residential complex service provided to Tamil Nadu Police Housing Corporation Limited, whether the appellant's service falls under the category of works contract exempt from Service Tax, and whether the appellant is entitled to abatement under Notification No. 01/2006.

Issue 1: Liability to pay Service Tax
The appellant was alleged to have undertaken construction of a residential complex service for Tamil Nadu Police Housing Corporation Limited without paying Service Tax or filing any Service Tax return. The Show Cause Notice proposed that the appellant was liable to pay appropriate Service Tax on the taxable value of services rendered from a certain date. The appellant's argument during personal hearing was that the service involved a works contract with both goods and services, making it exempt from Service Tax under the category of construction of residential complex services.

Issue 2: Abatement under Notification No. 01/2006
The appellant contended that by granting abatement of 67% as per Notification No. 01/2006, it was acknowledged that the service, if rendered, was a works contract. The appellant argued that since the contract was composite, demanding Service Tax under the construction of residential complex service category was not applicable. The appellant also highlighted that the ownership of the quarters being constructed vested with the Government of Tamil Nadu, implying no taxable service existed.

Issue 3: Precedent and Legal Interpretation
The appellant relied on the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise and Customs, Kerala v. M/s. Larsen & Toubro Ltd., which stated that works contract services could not be taxed before a certain date. The appellant referenced various CESTAT Bench orders following the Supreme Court decision to argue that there was no basis to levy Service Tax on works contract services before a specified date. The appellant's position was supported by the observation that the taxable services mentioned in the Finance Act referred only to service contracts without elements of composite works contracts.

Conclusion:
Considering the specific legal interpretation and the appellant's claim that they provided works contract services only, the judgment concluded that no tax was liable on the construction contracts executed before a certain date. The impugned order was set aside, and the appeal was allowed with any consequential benefits as per the law.