2024 (3) TMI 181 - AT - Service Tax

Scope of SCN - no demand of service tax has been made under Works Contract Service from the appellants - Benefit of Notification No.1/2006-ST dated 01.03.2006 was not given to the appellant - want of evidence - HELD THAT - In this case, it is not in dispute that the appellant is providing the services along with materials. Therefore, the appropriate classification of the services is under Works Contract Service and no demand of service tax is raised against the appellant under Works Contract Service. Therefore, following the decision of 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 , wherein the Hon ble Apex Court has observed the finding that Section 67 of the Finance Act, which speaks of gross amount charged , only speaks of the gross amount charged for service provided and not the gross amount of the works contract as a whole from which various deductions have to be made to arrive at the service element in the said contract. We find therefore that this judgment is wholly incorrect in its conclusion that the Finance Act, 1994 contains both the charge and machinery for levy and assessment of service tax on indivisible works contracts. The appropriate classification of the impugned service is under Works Contract Service and no demand of service tax has been made under Works Contract Service from the appellants under Works Contract Service. In that circumstances, the demand of service tax is not sustainable. Appeal allowed.

Summary

Issues involved: Appeal against demand confirmed under Section 73(2) of the Finance Act, 1994 for providing construction services under the category of "Commercial or Industrial and Construction Services".

Summary:
The appellant appealed against the demand confirmed under Section 73(2) of the Finance Act, 1994 for providing construction services to M/s Durgapur Steel Plant. An investigation was conducted, and a show-cause notice was issued, resulting in the confirmation of the demand of service tax along with interest and penalty. The appellant challenged the order before the ld.Commissioner (Appeals) on the grounds of providing services along with materials and paying service tax. The ld.Commissioner (Appeals) upheld the order, leading the appellant to appeal further.

The Appellate Tribunal noted that the appellant provided services along with materials, entitling them to the benefit of Notification No.1/2006-ST dated 01.03.2006. As the services fell under "Works Contract Service," no demand of service tax was raised against the appellant under this category. The Tribunal referred to a decision of the Hon'ble Apex Court regarding the taxation of service contracts simpliciter and composite works contracts, emphasizing the need to bifurcate service elements in composite works contracts for taxation. Consequently, the demand of service tax was deemed unsustainable, and the impugned order was set aside, allowing the appeal with consequential relief.

Additionally, the Tribunal observed that as the amount paid by the appellant had been collected from the service recipient and paid to the Department, the appellant was not entitled to claim a refund of the service tax amount deposited. The appeal was disposed of accordingly.