2024 (3) TMI 234 - AT - Service Tax

Classification of services - commercial or industrial construction service or works contract service? - appellant was awarded a work order by Orissa Power Generation Corporation Ltd., IB Thermal Power Station, Banharpali, Dist. Jharsuguda (ITPS) for the work of strengthening of peripheral bund of ash pond B and slope of the embankment of PST at ITPS - Extended period of Limitation - HELD THAT - It is a fact borne on the record that the appellant has provided the service along with materials. Therefore, the said service merits classification under the category of works contract service , which came into the Service Tax net with effect from 01.06.2007. Admittedly, the demand has not been raised against the appellant under works contract service. 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 observed Works contract were not chargeable to service tax prior to 1.6.2007. The merit classification of the services rendered by the appellant is under works contract service. As no demand has been raised under the category of works contract service , therefore, no demand is sustainable against the appellant. Extended period of limitation - HELD THAT - The whole of the demand has been raised against the appellant by invoking the extended period of limitation. In the facts and circumstances of the case, the extended period of limitation is not invokable. The appellant succeeds on merits as well as on limitation - Appeal allowed.

Summary

Issues involved:
The judgment involves the confirmation of Service Tax demand against the appellant under the category of "commercial or industrial construction service" for a specific project awarded to them. The appellant contests this classification, claiming the service falls under "works contract service."

Details of the Judgment:

Issue 1: Classification of Service
The appellant executed a project involving the strengthening of peripheral bund of ash pond 'B' and slope of the embankment of PST at ITPS. The Revenue contends that the service provided during the period in question falls under "commercial or industrial construction service" as per Section 65(25b) of the Finance Act, 1994. However, the appellant argues that the service should be classified as "works contract service."

Issue 2: Show Cause Notice and Adjudication
A Show Cause Notice was issued to the appellant invoking the extended period of limitation. The appellant contested the classification, but the adjudicating authority upheld the demand under the category of commercial or industrial construction service. The appellant challenged this decision, leading to the appeal.

Issue 3: Decision and Rationale
The tribunal examined the facts and found that the service provided by the appellant, which included materials, should be classified as "works contract service." Citing the decision of the Hon'ble Apex Court in various cases, the tribunal emphasized the distinction between works contracts and service contracts. As the demand was not raised under works contract service, the tribunal held that no demand is sustainable against the appellant. Additionally, the tribunal noted that the extended period of limitation was not applicable in this case.

Conclusion
Consequently, the tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment highlights the importance of correctly classifying services under the appropriate category for taxation purposes and emphasizes the need for adherence to legal provisions and precedents in such matters.