2024 (4) TMI 820 - AT - Service Tax

Non-payment of Service Tax - works contract services - amounts obtained from Form 26 AS (Income Tax Department) for the Financial Year 2015-16 - HELD THAT - Since the activity of providing WCS is not covered under negative list mentioned in section 66D of the Finance Act (impugned period being subsequent to 01.07.2012) the activity is taxable - The activity is liable to tax. But with an abatement as is given in Notification No.11/2014 dated 11th July 2014 since the construction of additional building amounts to execution of original works. In the present case the said taxable service is provided to M/s. Garrison Engineers which admittedly is government authority under Military Engineering Service (MES) As has also been appreciated by Commissioner (Appeals) in para 11.4 of the order under challenge. The onus was on Revenue to prove that service is rendered for commerce purposes. The service is construction of additional building for the government authority. There appears no profit motive with the recipient (M/s. Garrison Engineers). The Notification No.25/2012 dated 20.06.2012 the entry No.12 (c) exempts such services from tax liability if given to Government Department. The demand of service tax even on the amount of Rs.5, 72, 590/- is also liable to be set aside. The order under challenge is therefore not sustainable. The same is hereby set aside - appeal allowed.

Summary

Issues Involved:
The issue involves the liability of service tax on amounts received by the appellant from different entities for providing taxable services during the financial year 2015-16.

Issue 1: Liability of service tax on amounts received

The Department proposed to recover service tax on the amount received by the appellant from M/s. Garrison Engineer, Gwalior and from Municipal Corporation, Gwalior for providing taxable services during the financial year 2015-16. The appellant contested this demand, arguing that the amount received from Municipal Corporation, Gwalior was for the sale of goods and not liable for service tax. Regarding the amount received from M/s. Garrison Engineer Gwalior, it was claimed that the services provided were exempted from tax liability under Notification No.25/2012. The appellant challenged the interpretation of the Mega Exemption Notification and sought to set aside the order under challenge.

Issue 2: Interpretation of works contracts service

The demand for service tax was based on the amounts recorded in Form 26AS for the financial year 2015-16. The Commissioner (Appeals) had already set aside the demands related to amounts received from M/s. Garrison Engineer Airforce, Gwalior and Municipal Corporation of Gwalior. The present appeal focused on the correctness of the demand related to an amount received from M/s. Garrison Engineer (EM), Gwalior for construction work. The Tribunal observed that this amount was for works contracts service involving the transfer of property in goods, which is taxable. However, considering the nature of the service provided to a government authority, the Tribunal held that the demand for service tax on this amount should be set aside based on the exemption provided under Notification No.25/2012.

In conclusion, the Tribunal set aside the demand for service tax on the amount received from M/s. Garrison Engineer (EM), Gwalior, as the service provided fell under the exemption for services provided to government authorities. The order under challenge was deemed unsustainable and the appeal was allowed.