2024 (6) TMI 958 - AT - Service Tax

Classification of service - Works Contract Service or not - work of erection of towers including route alignment profiling tower spotting tower earthing etc. - exemption under N/N. 11/2010-ST dated 27/2/2010 and N/N. 45/2010- ST Dated 20/7/2010 - HELD THAT - Admittedly such service cannot be provided without the usage of goods. The items like cement sand stone and other consumables are very much part of the goods which in the normal course would be liable for VAT payment. Since the main contractor was paying the VAT on the whole they were not separately paying the VAT. Therefore there are enough merits in the Appellant s pleadings that the service should be classified under Works Contract Service only. In order to put the rest the demands emanating on various services used for the transmission and distribution of electricity N/N. 11/2010-ST dated 27/2/2010 and N/N. 45/2010- ST Dated 20/7/2010 were issued clearly exempting all the services from the Service Tax - the Appellant is also eligible to get the benefit of these notifications as has been held by the Delhi Bench in the case of M/S KAILASH DEVBUILD INDIA PVT LTD VERSUS THE COMMISSIONER OF CENTRAL EXCISE JABALPUR MADHYA PRADESH 2023 (12) TMI 1010 - CESTAT NEW DELHI . Appeal allowed on merits.

Summary

Issues involved: Classification of service under "Works Contract Service", applicability of Service Tax, exemption under Notifications, suppression of facts, limitation period.

Classification of service under "Works Contract Service": The Appellant, engaged in erection of towers, treated their work as "Works Contract" and paid Service Tax under this category. The Adjudicating Authority confirmed the demand, leading to the appeal before the Tribunal. The Appellant argued that since goods like cement, sand, and stone formed a major portion of the works contract, the service should be classified as "Works Contract". They also contended that they were correctly treating the activity as such for VAT purposes. The Appellant further relied on the exemption notifications related to transmission of electricity to support their classification under "Works Contract Service". The Tribunal found merit in the Appellant's arguments and allowed the appeal on merits, holding that the service falls under "Works Contract Service".

Exemption under Notifications: The Appellant claimed exemption under Notification No. 11/2010-ST and Notification No. 45/2010-ST, which exempted services related to transmission of electricity. The Tribunal agreed with the Appellant's contention and held that they were eligible for the benefit of these notifications, similar to a precedent case cited.

Suppression of facts and limitation period: The Appellant had intimated the Department about treating the service under "Works Contract Service" and had been filing returns accordingly. The Tribunal noted that the Appellant had a bona fide belief in paying Service Tax under this category, with no suppression of facts. Consequently, the confirmed demand for the extended period was set aside on account of limitation. The appeal was allowed with consequential relief as per law.