2025 (2) TMI 377 - AT - Service Tax

Entitlement to abatement granted by the learned Commissioner - assessee has not satisfied the necessary conditions of the N/N. 1/2006-ST dated 01.03.2006 - HELD THAT - The learned Commissioner vide impugned order finds that the demands in both SCNs were raised without considering the applicable abatement under N/N. 1/2006-ST dated 01.03.2006 which was admissible to the noticee and that the noticee was eligible for the said abatement. The learned Commissioner has not only held that the assessee is eligible for abatement but has also quantified the abatement available to the assessee. Having acknowledged the presence of material and labour components in the services provided by the assessee to the oil companies it was not open to the learned Commissioner to disregard the classification claimed by the assessee under Works Contract Service . Conclusion - The impugned order is not sustainable as for as the categorization of works under various other heads than Works Contract Service is concerned; therefore the same is liable to be set aside. Appeal allowed.

Summary

The Appellate Tribunal, CESTAT Chandigarh, heard an appeal regarding the service tax demand on a proprietorship firm, Ashwani Marwah, engaged in providing services to oil companies. The department issued two show-cause notices proposing a total demand of Rs. 1,46,36,336 under various headings. The Commissioner confirmed a service tax of Rs. 48,30,025 and dropped the demand of Rs. 98,06,311 by granting abatement of 67% under Notification No. 1/2006-ST. The Revenue appealed, arguing that the abatement was not justified.The Counsel for the assessee argued that the services provided fell under 'Works Contract Services' and should not have been categorized separately. She cited various decisions supporting her stance. She contended that the Revenue's appeal should be dismissed as the services were composite in nature and classifiable under 'Works Contract Service'. She also claimed that a substantial portion of the demand was time-barred due to lack of evidence of suppression or fraud.The Authorized Representative for the Revenue reiterated the findings of the impugned order. The Tribunal considered both sides' arguments and reviewed the records. The Commissioner had acknowledged the presence of material and labor components in the services and granted abatement to the assessee. The Tribunal held that the works undertaken by the assessee were classifiable under 'Works Contract Service' and could not be taxed before 01.06.2007. The Tribunal referred to similar cases where the classification under 'Works Contract Service' was upheld.Ultimately, the Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal. The decision was based on the classification of works under 'Works Contract Service' and the lack of substantial grounds for the Revenue's appeal. The order was pronounced in the open court, with the result favoring the assessee and rejecting the Revenue's appeal.