2016 (11) TMI 700 - AT - Service Tax

Works contract service - modification of the stay order - power of Tribunal under statute to pass an order when there are change of circumstances - Held that - the services carried out by the appellant during the period of dispute are indeed in the nature of works contract services. It is also seen that the nature of their work, in relation to construction of port or other port, are fully exempted from the whole of service tax leviable thereon right from 07-06-2005 till date, by a series of notifications. In fact it is interesting to note that after bringing Works Contract Service into the tax net vide Section 65(105) (zzzza) of the Finance Act, 1994, notification 25/2007-ST dated 22-05-2007 had incorporated services provided in relation to execution of a works contract , for exemption from service tax liability, in relation to construction of a port or other port services - the activities contracted and carried out by the appellant are very much in the nature of works contract services in relation to construction of port or other port - the said activities are fully exempted by service tax all through the period of dispute by virtue of series of exemption notifications - for period after 01-06-2007 the works contract services provided by appellant continue to be exempt from service tax liability in view of aforesaid exemption notifications - appeal allowed.

Summary

Issues:
Appeal for modification of Stay Order, Interpretation of service tax law regarding works contract services, Eligibility for exemption notifications, Tribunal's power for modification of stay order.

Analysis:

1. Appeal for Modification of Stay Order:
The appellant filed a Misc. Application seeking modification of the stay order, arguing that the issue is covered by case law and notifications. The department opposed the modification, stating that the Tribunal has no power for modification. The Tribunal held that it has inherent powers for modification of stay orders based on changed circumstances. The High Court's endorsement of such powers was cited. The Tribunal dismissed the department's contention that it lacks the power for hearing and deciding applications for modification of stay orders.

2. Interpretation of Service Tax Law - Works Contract Services:
The dispute centered around the nature of services provided by the appellant to the Krishnapatnam Port Company Limited. The Tribunal noted that the services were assessed under works contract services after 01-06-2007. The original authorities confirmed that the activities carried out by the appellant were under works contract services. The Tribunal analyzed the definition of other port services and concluded that the services provided by the appellant were indeed works contract services, exempted from service tax by various notifications.

3. Eligibility for Exemption Notifications:
The Tribunal found that the services undertaken by the appellant for the construction of ports fell under works contract services, fully exempted from service tax by notifications. The Tribunal highlighted that the works contract services provided by the appellant prior to 01-06-2007 cannot be vivisected based on a Supreme Court judgment. The services continued to be exempt from service tax liability even after 01-06-2007 due to the exemption notifications.

4. Tribunal's Power for Modification of Stay Order:
After considering the arguments, the Tribunal allowed the appeals, stating that the activities carried out by the appellant were in the nature of works contract services exempted from service tax. The appeals were allowed with consequential reliefs, if any, as per law. The Miscellaneous Applications were disposed of accordingly.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT HYDERABAD showcases the legal intricacies involved in interpreting service tax laws, exemption notifications, and the Tribunal's powers for modification of stay orders.