2014 (8) TMI 231 - AT - Service Tax

Denial of refund claim - Commercial or industrial construction service - Period of taxability of services - Held that - both the respondents during the period of dispute had provided the services of commercial or industrial construction which were taxable at that time under Section 65 (105) (zzq) readwith Section 65 (25b). The respondent s plea is that since w.e.f. 01/06/07, their activity became taxable as works contract service under Section 65 (105) (zzzza), during the period prior to 01/06/07, their activity would not be taxable - impugned orders holding that during the period prior to 01/06/07 the services of civil or industrial construction or erection, installation or commissioning, provided as indivisible works contract were not taxable, are not sustainable - Following decision of G.D. Builders vs. Union of India 2013 (11) TMI 1004 - DELHI HIGH COURT , Alstom Projects India Ltd. vs. CCE reported in 2011 (3) TMI 538 - CESTAT, NEW DELHI and Instrumentation Ltd. vs. CCE, Jaipur - I reported in 2011 (3) TMI 546 - CESTAT, NEW DELHI - Decided in favour of Revenue.

Issues Involved:
1. Whether services provided as an indivisible works contract prior to 01/06/07 are taxable.
2. Validity of refund claims for services provided before 01/06/07.
3. Interpretation of Section 65(105)(zzzza) and related rules.

Issue 1: Taxability of Services Provided as Indivisible Works Contract:
The appeals involved a dispute regarding the taxability of services provided as an indivisible works contract prior to 01/06/07. The respondents contended that since their activities became taxable as works contract service under Section 65(105)(zzzza) from 01/06/07, their services before that date should not be taxable. However, the Tribunal referred to the judgment of the Hon'ble Delhi High Court in the case of G.D. Builders vs. Union of India, where it was held that services of civil or industrial construction, even if provided as an indivisible works contract, were taxable before 01/06/07. The Tribunal also cited precedents like Alstom Projects India Ltd. vs. CCE and Instrumentation Ltd. vs. CCE, Jaipur, which supported this view. Consequently, the Tribunal set aside the impugned orders and held that services provided as indivisible works contracts before 01/06/07 were indeed taxable.

Issue 2: Validity of Refund Claims:
The respondents had filed refund claims after the introduction of works contract service w.e.f. 01/06/07, arguing that their services were covered by works contract service and thus not taxable before that date. The Jurisdictional Assistant Commissioner dismissed these claims, leading to appeals to the Commissioner (Appeals). The Commissioner (Appeals) allowed the appeals, stating that services provided as indivisible works contracts before 01/06/07 were not taxable. However, the Tribunal, following the Delhi High Court judgment and previous Tribunal decisions, held that these services were indeed taxable, thereby rejecting the refund claims.

Issue 3: Interpretation of Section 65(105)(zzzza) and Related Rules:
The Tribunal analyzed Section 65(105)(zzzza) and related rules to determine the taxability of works contract services. The section defined works contract as a contract involving the transfer of property in goods and specified various activities falling under this definition. Additionally, the Tribunal considered Rule 2(A) of the Service Tax Valuation Rules, which outlined the taxable value of works contract services. The introduction of works contract service w.e.f. 01/06/07 had a significant impact on the taxability of services provided by the respondents, leading to the dispute over the applicability of tax before this date. The Tribunal's decision was based on a comprehensive interpretation of these legal provisions and relevant precedents.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each issue, supported by legal reasoning and references to relevant case law.

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