2016 (8) TMI 144 - AT - Service Tax

Nature of activity / services provided by the assessee - security services or civil construction services - The appellate authority examined the provisions of section 44 AD(1) of Income Tax Act and observed that the said section not only relates to the business of civil construction but also to supply of labour for civil construction. As such, it cannot be said that the appellant was engaged in the business of civil construction merely on the ground that the assessment has been done under section 44AD(1) of the Income Tax Act. As regards bills, he observed that same were not produced before the original adjudicating authority, as such amount to introduction of new evidence. Held that - It is not clear as to under which category the services being provided by the appellant are being classified. Even if they relate to the providing labour for construction. As per the appellant, during the relevant period, there was no service tax heading under the Finance Act, 1994, which read as security and placement service. Matter needs re-examination and revaluation of entire evidence on record. - matter remanded back.

Summary

Issues: Service Tax demand confirmation based on misclassification of services provided by the appellant.

Analysis:
1. The appellant was registered with the Service Tax department but failed to deposit any Service Tax or file half-yearly returns, leading to a demand of ?79,000 against them. The Revenue based its claim on the appellant's Income Tax return for the assessment year 2004-2005, where income from security and placement services was mentioned, implying service provision subject to tax.

2. The appellant contended that their income was from construction work, not security or placement services. Despite producing bills and referring to Income Tax Act provisions, the original adjudicating authority upheld the demand and penalties, citing the Income Tax return as evidence of service nature.

3. On appeal, the appellant reiterated their construction work nature, supported by certified bills and Income Tax Act provisions. The appellate authority noted that section 44 AD(1) covers civil construction and labor supply, rejecting the argument solely based on the Income Tax return. The bills were considered new evidence and deemed unverifiable due to incomplete company addresses.

4. The appellate authority acknowledged the gross receipt as cum duty price but upheld the tax demand, emphasizing the bills' late submission and the post-order Chartered Accountant certificate. However, the entire receipt was to be considered cum duty price, directing the lower authorities to recalculate the tax demand.

5. The Tribunal observed a lack of clarity in the classification of services under which the appellant was taxed, with no specific service category disclosed in the show cause notice or previous orders. The absence of detailed examination of facts by lower authorities raised doubts about the misclassification of services provided by the appellant.

6. Considering the incomplete analysis and lack of evidence indicating the appellant's engagement in security or labor services, the Tribunal deemed a reevaluation necessary. The impugned order was set aside, remanding the matter to the original adjudicating authority for a comprehensive reassessment based on the overall facts and circumstances.

7. The appeal was allowed for remand, emphasizing the need for a detailed review of evidence and proper classification of services provided by the appellant before confirming the Service Tax demand.