2024 (9) TMI 1358 - AT - Service Tax

Taxability of Works Contract Services provided by the appellant - Whether the benefit of entry 12 A (a) of notification 25/2012 was available only for such contracts as were executed before 01.03.2015? - extended period of limitation. HELD THAT - Sr. No. 12 of Mega Exemption N/N. 25/2012-ST dated 20.06.2012 as amended vide N/N. 6/2015 dated 01.03.2015 is reported below vide which the entry at serial no. (c) above, was omitted vide N/N. 6/2015-ST dated 01.03.2015 with effect from 01.04.2015. This Perusal is sufficient to hold that for the period in dispute, the condition that contracts for rendering construction/WCS services to be executed prior to 01.03.2015 was no more in existence as it was omitted with effect from 1.04.2015. Resultantly the services as that of construction provided to Government/ local authority/Governmental authority remain exempted from entire service tax liability irrespective the date of contract for the purpose is post 01.03.2015. In the present case the contract is 19.08.2015 i.e. post-1.04.2015 hence, the condition of contract to be executed prior 1.03.2015 is held to have wrongly being relied upon/invoked by the adjudicating authority below while confirming the demand of Rs.9,56,210. Admittedly the Service in question has been rendered to government/ local authority (PWD) In light of the above the discussion the said demand is held liable to be set aside. Extended period of limitation - HELD THAT - It is observed that the non-filing of ST-3 returns is alleged as the act of suppression. However, it has been observed that even in reply to the show cause notice, the appellant had explained that exemption being arising from notification 25/2012 has been the reason to not to file the returns. The said contention of appellant has been accepted, there is no act of suppression being committed by the appellant. Present is not the case of evasion of service tax. Hence, it is held that extended period has wrongly been invoked. The show cause notice itself therefore gets barred by time. The order under challenge, upholding the invocation of extended period is therefore held liable to be set aside. The order under challenge/ O-I-A is hereby set aside - Appeal allowed.

Summary

Issues:
1. Taxability of Works Contract Services provided by the appellant.
2. Application of exemption notifications under the Finance Act 1994.
3. Validity of demand for Service Tax and penalties.
4. Invocation of extended period of limitation for issuing the Show Cause Notice.

Analysis:

1. The appellant, registered for Works Contract Services (W.C.S), was alleged to have not paid Service Tax for activities rendered in FY 2015-16. The department proposed recovery based on third-party data. The original authority dropped part of the demand, but a portion was upheld in the subsequent appeal. The appellant contended that the services rendered were exempt under notification no. 25/2012-ST. The appellant also argued that the demand was based on incorrect documents and that ST-3 Returns were not required due to the non-taxable nature of the services. The tribunal considered these arguments and held that the demand was wrongly confirmed, setting it aside.

2. The appellant claimed exemption under entry no. 12 A(a) of the notification no. 25/2012 for construction services provided to government authorities. The department argued that the exemption was not applicable due to the contract execution date post 01.03.2015. The Commissioner (Appeal) partially allowed the exemption for a drainage system but denied it for a girls hostel construction. The tribunal analyzed the relevant entry and held that the condition of contract execution before 01.03.2015 was no longer valid post the amendment on 01.03.2015. Consequently, the demand for Service Tax was set aside based on this exemption.

3. The tribunal further examined the invocation of the extended period of limitation for issuing the Show Cause Notice. The appellant's explanation for not filing ST-3 Returns due to the exemption was accepted. It was concluded that there was no suppression or evasion of Service Tax, leading to the extended period being wrongly invoked. As a result, the tribunal set aside the penalties imposed along with the demand, holding the order under challenge to be incorrect.

4. Based on the detailed analysis of the contentions raised by both parties and the examination of relevant legal provisions and notifications, the tribunal concluded that the demand for Service Tax was not valid due to the exemption applicable to the services provided by the appellant. The tribunal also found that the extended period of limitation was wrongly invoked, leading to the penalties being set aside. Consequently, the tribunal allowed the appeal and set aside the order under challenge.