2015 (12) TMI 603 - AT - Service Tax

Classification of service - Construction of Residential Complex service or works contract service - Held that - Show-cause notice issued to the appellant indicates that the classification of the services is to be considered under the category of Commercial or Industrial Construction Services and directed the respondent to show-cause why it should not be done so whereas the adjudicating authority has confirmed the demand of service tax on Construction of Residential Complex service which, the first appellate authority has correctly held that the adjudicating authority has traversed beyond the allegation of the show-cause notice. If the assessee is not put to notice under which category the service tax sought to be demanded, the conclusion reached by the first appellate authority is correct and does not suffer from any infirmity. Be that as it may, we also find that the contract which has been entered by the respondent is a works contract and the entire contract has been executed prior to 01.06.2007. In our view the issue is no more res integra as the judgement of the Hon ble Apex Court in the case of CCE v. Larsen and Toubro Ltd and Ors. - 2015 (8) TMI 749 - SUPREME COURT it has been held that works contract cannot be vivisected prior to 01.06.2007 for taxing separately. - Decided against Revenue.

Summary

Issues involved:
1. Alleged violation of principles of natural justice due to exceeding scope of show cause notice.
2. Discrepancy between show-cause notice and adjudicating authority's decision regarding service tax classification.
3. Interpretation of works contract execution timeline for taxability.

Analysis:
1. The first issue pertains to the violation of natural justice principles by the adjudicating authority exceeding the scope of the show cause notice. The appellate authority set aside the order-in-original citing precedents like Hindustan Polymers Co. Ltd. and GTC Industries Limited, emphasizing that altering the case beyond the notice's allegations is unjust. The judgment highlighted that such actions are not maintainable under law, ensuring fairness in proceedings.

2. The second issue revolves around the discrepancy in service tax classification between the show-cause notice and the adjudicating authority's decision. The appellate tribunal noted that the notice specified consideration under "Commercial or Industrial Construction Services," while the authority demanded tax for "Construction of Residential Complex" services. Consequently, the tribunal concurred with the appellate authority's observation that the authority had strayed from the notice's allegations, affirming the correctness of the impugned order.

3. Lastly, the interpretation of the works contract execution timeline for taxability was addressed. The tribunal referenced the judgment in CCE v. Larsen and Toubro Ltd, establishing that works contracts executed before 01.06.2007 cannot be dissected for separate taxation. In this context, the tribunal determined that the respondent's contract qualified as a works contract entirely executed pre-2007, reinforcing the inapplicability of separate taxation. Consequently, the tribunal upheld the impugned order, deeming the Revenue's appeal meritless.

In conclusion, the appellate tribunal rejected the Revenue's appeal and disposed of the respondent's cross objection, affirming the correctness of the impugned order based on the issues discussed and the legal interpretations provided.