2024 (8) TMI 1336 - AT - Service Tax

Classification of service - Construction of complex service or Works Contract service - scope of SCN - Time limitation - HELD THAT - While the SCN demanded the Service Tax under the category of Works Contract service for the period 01.06.2007 to 31.03.2011, the Adjudicating Authority has confirmed the demand under the different category i.e., under the category of Construction of Residential Complex service and has also given some justification to come to this conclusion. This would amount to traversing beyond the scope of SCN. This will also amount to non-following of principles of natural justice. The Appellant was never put to notice that the demand is going to be confirmed under the category of Construction of complex service . They were issued notice seeking as to why the demand should not be confirmed under the category of Works Contract service . Therefore, they are defending the demand made under the category of Works Contract, without taking any defence on account of Construction of Complex service. The confirmed demand is not legally sustainable since the demand was confirmed under the category of Construction of Residential Complex service while the SCN was issued under the category of Works Contract service . The Tribunals have also been holding that no Service Tax is payable till 01.07.2010 irrespective of the category under which the service may fall - Appeal allowed. Time limitation - HELD THAT - First of all, the Appellant was properly registered with the Department and they have been filing their Returns regularly. Their ST3 Returns are one of the relied upon documents while issuing the SCN. Further, the VAT Returns have been referred to in the SCN, which shows that they have filed their VAT Returns regularly. Thus, all the data with regard to their turnover was very much being shown in the Returns. Further, in order to clarify the issue as to whether Construction of Residential Complex service would be taxable or not, CBIC had issued various circulars between the period 2006 and 2012 - Hence, it can also be said to be as an issue of interpretation. In such circumstances, the Appellant cannot be fastened with the allegation of suppression - Accordingly, the confirmed demand for the extended period set aside on account of time bar also. Appeal disposed off.

Summary

Issues Involved:
1. Classification of services under "Construction of Complex Service" vs. "Works Contract Service."
2. Traversing beyond the scope of the Show Cause Notice (SCN).
3. Applicability of Service Tax prior to 01.07.2010.
4. Allegation of suppression and time bar.
5. Validity of the Adjudicating Authority's order and the Revenue's appeal.

Detailed Analysis:

1. Classification of Services:
The primary issue revolves around whether the services provided by the Appellant should be classified under "Construction of Complex Service" or "Works Contract Service." The SCN issued on 24.10.2011 demanded Service Tax under "Works Contract Service" for the period 01.06.2007 to 31.03.2011. However, the Adjudicating Authority confirmed the demand under "Construction of Complex Service" for the entire period from 01.04.2007 to 31.03.2011, which the Appellant contested.

2. Traversing Beyond the Scope of SCN:
The Appellant argued that the Adjudicating Authority traversed beyond the scope of the SCN by confirming the demand under "Construction of Complex Service" instead of "Works Contract Service." The Tribunal agreed, citing precedents such as P.K. Agarwalla vs. Commissioner of Central Excise & Service Tax, Kolkata, and KPR Fertilizers Ltd vs. Commissioner of Customs, Central Excise & Service Tax, Visakhapatnam-II, which held that confirming demands under a different category than specified in the SCN amounts to traversing beyond its scope and violates principles of natural justice.

3. Applicability of Service Tax Prior to 01.07.2010:
The Appellant contended that Service Tax on "Construction of Complex Service" was not payable until 01.07.2010, relying on the case of Modi Ventures vs. Commissioner of Central Tax, Secunderabad-GST. The Tribunal upheld this view, noting that various tribunals and High Courts had consistently held that no Service Tax was payable on such services until 01.07.2010.

4. Allegation of Suppression and Time Bar:
The Appellant argued that the SCN issued on 24.10.2011 for the period 2006-07 to 2010-11 was time-barred and that there was no suppression of facts as they were registered with the Central Excise Department and filed their Service Tax and VAT returns on time. The Tribunal found merit in this argument, noting that the issue involved interpretation and that the Appellant had disclosed all relevant details in their returns. Consequently, the confirmed demand for the extended period was set aside on account of time bar.

5. Validity of the Adjudicating Authority's Order and the Revenue's Appeal:
The Tribunal found that the Adjudicating Authority had erred in confirming the demand under a different classification without issuing a proper SCN to the Appellant. The Revenue's appeal, which sought to rectify this error by reclassifying the services under "Works Contract Service," was dismissed. The Tribunal held that entertaining the Revenue's appeal would mean reviving a legally unsustainable order, which it declined to do.

Conclusion:
The Tribunal allowed the Appellant's appeal on merits, setting aside the confirmed demand under "Construction of Complex Service" and dismissing the Revenue's appeal. Both appeals were disposed of accordingly.