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2024 (6) TMI 14 - AT - Service TaxLiability to pay service tax under 'Erection, Commissioning, and Installation Services' (ECIS) for the period up to 1.6.2007 - demand under 'Works Contracts Services' (WCS) for the period from 1.6.2007 to 31.12.2010 - sustainability of the demand raised invoking the extended period - HELD THAT - The works executed by the appellant during the relevant period involves composite contracts using materials as well as rendition of services. For this reason, the demand raised under ECIS cannot sustain and the demand has to be made under WCS only. The decision of the Hon ble Apex Court in the cae of L T 2015 (8) TMI 749 - SUPREME COURT has held that the demand in the case of construction services which involves ue of materials as well as rendering of services can be made only under WCS and cannot be demanded under any other heading prior to 1.6.2007. Thus, the demand raised prior to 1.6.2007 is set aside entirely. WCS - The services rendered by the appellant being composite contracts, the demand raised by the department under WCS is in accordance with law. We do not think that the said demand requires any interference. On merits, this issue is held in favour of the Department and against the appellant. Following the decisions in the case of Cosmic Dye Chemical Vs CCE Bombay 1994 (9) TMI 86 - SUPREME COURT , Kaur Singh 1996 (11) TMI 84 - SUPREME COURT we are of the considered view that the demand raised under WCS after 01.06.2007 invoking the extended period cannot sustain. The issue on limitation is answered in favour of the appellant and against the Department. The appeal is partly allowed with consequential reliefs, if any.
Issues:
1. Whether the demand under 'Erection, Commissioning or Installation Services' for the period up to 1.6.2007 is legal and proper. 2. Whether the demand under Works Contracts Services for the period from 1.6.2007 till 31.12.2010 is legal and proper. 3. Whether the demand raised invoking the extended period is sustainable or not. Analysis: 1. The demand for service tax up to 1.6.2007 under 'Erection, Commissioning and Installation Services' (ECIS) was challenged by the appellant. The appellant argued that as per the Supreme Court's decision in a specific case, composite contracts involving materials and services should only be taxed under 'Works Contracts Service' (WCS). The Tribunal agreed, citing the apex court's decision, and set aside the demand for the period up to 1.6.2007 entirely. 2. The demand under WCS for the period from 1.6.2007 to 31.12.2010 was contested by the appellant, claiming that during that time, confusion existed regarding the levy of service tax under WCS due to pending litigations. The department argued that the demand under WCS was lawful. The Tribunal upheld the demand under WCS, stating that the services rendered were composite contracts, aligning with the law. Therefore, this issue was decided in favor of the department. 3. Regarding the demand raised invoking the extended period, the appellant argued that there was no willful suppression of facts, relying on specific legal precedents. The department contended that the extended period demand was valid due to non-payment of service tax discovered during verification. The Tribunal analyzed the situation and concluded that there was no positive act of suppression by the appellant, thus setting aside the demand under WCS for the extended period after 01.06.2007. The penalties were also set aside for the normal period due to limitations. In conclusion, the appeal was partly allowed, with the demand under ECIS for the period up to 1.6.2007 being entirely set aside, while the demand under WCS for the period after 01.06.2007 was upheld on merits. However, the demand under WCS for the extended period was set aside entirely, and penalties were waived for the normal period due to issues of limitation.
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