2016 (1) TMI 563 - AT - Service Tax

Works contract service for pipeline laying for water supply - erection, commissioning or installation of plant etc. - Held that - Prima-facie, the works executed by the appellant cannot be covered under the category of (a) of works contract service, namely, errection, commissioning or installation of plant and machinery etc.. Considering the detailed findings by the Larger Bench of this Tribunal in the case of M/s Lanco Infratech Ltd, 2015 (5) TMI 37 - CESTAT BANGALORE (LB) , we find that the appellant has made out a case for full waiver of adjudicated demand. - Stay granted.

Summary

Issues:
1. Early hearing of stay petition
2. Liability for service tax under works contract service
3. Applicability of service tax prior to 01.06.2007

Analysis:

Issue 1: Early hearing of stay petition
The Miscellaneous Application sought early hearing of the stay petition filed by the appellant in relation to the confirmed demand of service tax. The appellant's counsel highlighted the delay in the hearing of the stay application filed in March 2014, leading to the current application for early hearing. The Tribunal admitted the miscellaneous application and decided to take up the stay application for immediate consideration.

Issue 2: Liability for service tax under works contract service
The appellant contested the total demand of service tax confirmed by the impugned order, amounting to &8377; 13,48,28,865/-, along with penalties. The appellant argued that the works undertaken did not fall under the category of erection, commissioning, or installation of plant and machinery. Citing precedents such as the Lanco Infratech Ltd. case and Indian Hume Pipe Co. Ltd. case, the appellant contended that the works were more aligned with commercial or industrial constructions rather than plant installation. The Revenue reiterated the original authority's findings but the Tribunal, after examining the records, ruled in favor of the appellant. The Tribunal found that the works executed were non-commercial civil works for government agencies, thus not liable for service tax under the works contract service category.

Issue 3: Applicability of service tax prior to 01.06.2007
The Tribunal also considered the applicability of service tax prior to 01.06.2007 concerning works contract services. Referring to the Supreme Court's decision in Larsen & Tubro Ltd., the Tribunal held that works contract services, including supply of materials, were not liable to service tax before the specified date. Based on this finding and the nature of the services provided by the appellant, the Tribunal granted a full waiver of the adjudicated demand, staying the recovery of the amount, interest, and penalty until the appeal's disposal.

In conclusion, the Tribunal disposed of the Miscellaneous Application and Stay Petition accordingly, granting relief to the appellant based on the nature of the works undertaken and the legal precedents cited in support of the appellant's position.