2023 (11) TMI 98 - AT - Service Tax

Levy of service tax alongwith interest and penalty - Works Contract Service - providing Erection, Commissioning or Installation Services to M/s BPCL at the pumping station, Gujari - HELD THAT - On going through the special conditions of the Tender, it is clear that the bidder shall execute all the civil and electrical work of supply of all material; no separate amount to be paid for the service rendered is indicated; therefore, the work executed by the appellants fairly fall under the category of Works Contract Service, which is not taxable before 01.06.2007 as held 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 - the Department does not dispute the fact that the contract is of composite nature. Once the demand is held to be not sustainable, the question of interest and penalty does not arise. Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the demand of duty, interest, and penalties imposed on M/s Grewal Electric Corporation for providing Erection, Commissioning, or Installation Services to M/s BPCL at the pumping station, Gujari. The main contention revolves around the taxability of the services provided by the appellants before 01.07.2007.

Details of the Judgment:

1. Taxability of Services:
The appellants challenged the demand of duty, interest, and penalties imposed by the Department for providing services before 01.07.2007. The appellants argued that the services provided fall under Works Contract Service, which is not taxable before 01.06.2007 as per the decision of the Hon'ble Apex Court in the case of L&T. The Tribunal examined the special conditions of the Tender and concluded that the work executed by the appellants indeed falls under the category of Works Contract Service. Therefore, the demand was deemed not sustainable based on the nature of the contract.

2. Interpretation of Law and Penalty:
The appellants contended that penalty cannot be imposed when a question of law is involved, citing precedents such as Gujarat Intelligence Security (India) and Jivanbhai D. Makwana. They argued that the Department's initial ambiguity regarding the taxability of the services indicated a lack of clarity. The Tribunal noted that the Department itself was unclear about the taxability of the services initially, which supported the appellants' argument. The Tribunal held that since the demand itself was not sustainable, the question of interest and penalty did not arise.

Conclusion:
In light of the above considerations, the Tribunal allowed the appeal filed by M/s Grewal Electric Corporation and provided consequential relief, if any, as per the law. The judgment emphasized the non-taxability of Works Contract Service before 01.06.2007 and the importance of clarity in interpreting laws related to service tax.

Separate Judgment:
No separate judgment was delivered by the judges in this case.