2024 (4) TMI 1124 - AT - Service Tax

Classification of service - works contract service or erection, commissioning and installation services - scope of the supply to the recipients of services include the materials as well - suppression of facts or not - Extended period of Limitation - HELD THAT - There are force in the arguments of Appellant that the scope of their services also included the supply of material. The same is supported by the facts as recorded by Ld. Commissioner in Para 8(d) of the Order in Original dated 30.10.2014 wherein it is clearly coming up that the Appellant were also required to supply the materials. Therefore, the appropriate classification for the services provided by the Appellants would be works contract services and not erection, commissioning and installation services . Reliance placed on the decision of coordinate bench at Chennai in case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI wherein it is held that demand of service tax under the taxable category of erection, commissioning and installation only if the services are in the nature of services simpliciter. However, as per the facts recorded by Ld. Commissioner in the present case it clear that the scope of services of the Appellants also include supply of materials and therefore, the demand of service tax under the taxable category of erection, commissioning and installation services is not sustainable in the present case. The decision of Real Value Promoters is followed in many other decisions as well. The impugned order is set aside - appeal allowed.

Summary

Issues involved:
The appeal against the demand of Service Tax for the period 2009-10 to 2012-13 under the category of erection, commissioning, and installation services.

Summary:
The Appellant challenged the demand of Service Tax amounting to Rs.72,89,631/- for the period 2009-10 to 2012-13 under the category of erection, commissioning, and installation services. The revenue authorities discovered during a search that the Appellant provided taxable services in the mentioned period. The Appellant filed periodical ST-3 returns for some years but belatedly for others. A show cause notice was issued invoking the extended period of limitation under Section 73 of the Finance Act, 1994. The Ld. Commissioner confirmed the demand, interest, and penalties, which the Appellant contested in the appeal.

The Appellant argued that the services provided were actually under the category of "works contract" and not "erection, commissioning, and installation" services as determined by the Ld. Commissioner. The Appellant's scope of work included supplying materials, as evidenced in specific work orders. The Appellant contended that the demand under the wrong category was unsustainable, emphasizing that all transactions were recorded in their books without suppression or misstatement.

After considering both sides' submissions and reviewing the records, the Tribunal agreed with the Appellant. Citing a precedent from a Chennai bench, the Tribunal held that demand for service tax under the category of erection, commissioning, and installation is valid only for services simpliciter, not involving material supply. Since the Appellant's services included material supply, the demand under the mentioned category was deemed unsustainable. The Tribunal set aside the demand, allowing the appeal with any consequential relief.

This judgment highlights the importance of correctly categorizing taxable services based on the nature of the services provided, specifically distinguishing between services simpliciter and works contract services.