2024 (11) TMI 264 - AT - Service Tax

Classification as supply of tangible goods service - Demand the service tax on activity of transportation of RMC to the service recipient site is amount to service of supply of tangible goods service - activity of construction of Drain was proposed to be classified under site formation and Site Formation and Clearance , Excavation, Earth Moving Demolition Services HELD THAT - The appellant s activity by any stretch of imagination cannot be classified as supply of tangible goods service, therefore, the demand on this count is not sustainable. Whether the activities carried out by the appellant for M/s L T is covered by Commercial Industrial Construction Services, as claimed by the appellant or under Site Formation and Clearance , Excavation, Earth Moving Demolition Services as proposed by the Revenue - From the purchase order, the scope of work clearly shows that it is construction of Drain in Stone Pitching at Training Center HZMC, West. It is observed that the construction of water drain was constructed by providing and laying cement concrete etc. and also laying of Rubble Stone Pitching. This clearly shows that the appellant have carried out the service of commercial or Industrial Construction Service, hence the department s claim to classify the said activity under Site Formation and Clearance , Excavation, Earth Moving Demolition Services is absolutely incorrect. Therefore, the service is not classifiable under Site Formation and Clearance , Excavation, Earth Moving Demolition Services . Consequently, the demand on this count also does not sustain. Thus the entire demand is not sustainable. Decided in favour of assessee.

Summary

Issues:
Classification of services provided by the appellant under 'Supply of Tangible Goods Services' and 'Site Formation and Clearance' for taxation purposes.

Detailed Analysis:

1. The appellant, registered as a service provider under various categories, was issued a show cause notice proposing a service tax demand of Rs. 1,85,41,617 on the grounds of transportation of goods and construction services. The appellant contended that the transportation of ready mix concrete (RMC) should be classified as Goods Transport Agency (GTA) service, citing relevant contracts and judgments supporting their classification. They argued that the construction of a drain should be categorized as Industrial Commercial Service, not 'Site Formation and Clearance'. Additionally, they challenged the invocation of the extended period for demanding tax, citing lack of willful misstatement or suppression of facts.

2. The Revenue, represented by the Deputy Commissioner, supported the findings of the adjudicating authority regarding the tax demand.

3. Upon careful consideration, the Tribunal examined the contracts and invoices related to the services provided by the appellant. Regarding the transportation of RMC, it was determined that the appellant had indeed provided transportation services, consistent with GTA service classification. This conclusion was supported by previous judgments on similar cases.

4. The Tribunal also analyzed the construction of a drain for M/s L&T, finding that the work performed by the appellant aligned with Commercial Industrial Construction Services rather than 'Site Formation and Clearance'. The scope of work clearly indicated a construction service, leading to the rejection of the Revenue's classification.

5. Based on the above assessments, the Tribunal deemed the entire tax demand unsustainable. As the decision was made on merit, the issue of limitation was not addressed, and the impugned order was set aside, allowing the appeal.

This judgment highlights the importance of accurately classifying services for taxation purposes and the significance of contractual terms and scope of work in determining the appropriate tax liability.