2015 (12) TMI 1360 - AT - Service Tax

Demand of service tax - works contract - Erection, Commissioning and Installation Services; Site formation Services and GTA Services - Held that - As regards the service tax liability on the Erection Commissioning and Installation Services for MKVDC; the contract/work order is nothing but a works contract. Law has been settled by the Supreme Court in the case of CCE Vs. Larsen & Toubro Ltd. and others 2015 (8) TMI 749 SC - As regards the service tax liability under the category of Site Formation Services, Larger bench has settled the law as to laying of pipes /conduits for lift irrigation system undertaken for government/government undertakings and involving associated activities like soil preparation and filling, supporting masonry services gets classified as works contract, and is exempted from the service tax liability by the exempted granted in definition of Works Contract Services under section 65(105) (zzza) of the Finance Act, 1994. GTA Service - Appellant is not seriously contesting the tax liability and has already discharged the tax liability and interest and the prayer is only for setting aside the penalties. We find that the appellant had discharged the tax under the head GTA services before the issuance of show cause notice and has also paid the interest due. In our view, the issue of taxability under GTA services is one of interpretation, hence appellant could have entertained a belief that the services are taxable in the hands of the transporters. Accordingly, we are on the view that the penalties imposed on the appellants on this count needs to be set aside - Decided partly in favour of assessee.

Summary

Issues Involved:
Taxability of services rendered by the appellant under Erection, Commissioning and Installation Services; Site formation Services; GTA Services.

Erection, Commissioning and Installation Services:
The appeal challenged the taxability of services provided by the appellant under various categories. The appellant contended that the contracts executed for a specific project were works contracts and not liable to service tax. The tribunal, after considering the submissions, held that the service tax liability on Erection, Commissioning, and Installation Services for the project was incorrect. Referring to a Supreme Court case, the tribunal concluded that the contract in question was indeed a works contract, thereby setting aside the service tax liability.

Site Formation Services:
Regarding the tax liability under Site Formation Services, the tribunal cited a Larger bench decision that clarified the classification of activities related to laying pipes for a lift irrigation system as a works contract, exempt from service tax. Relying on this decision, the tribunal found the service tax liability and interest confirmed by the adjudicating authority unsustainable. Consequently, the tribunal allowed the appeal in this regard.

GTA Services:
In the case of GTA services, the appellant had already paid the tax liability and interest before the show cause notice was issued. The tribunal noted that the issue of taxability under GTA services involved interpretation and that the appellant could have reasonably believed the services were taxable. Thus, the penalties imposed on the appellant were set aside under section 80 of the Finance Act, 1994. The tribunal partially allowed the appeal concerning GTA services.

In conclusion, the tribunal disposed of the appeal by setting aside the service tax liability under Erection, Commissioning, and Installation Services and Site Formation Services while partially allowing the appeal regarding GTA services by overturning the penalties imposed.