2016 (11) TMI 1112 - AT - Service Tax

Demand - With effect from 1.6.2007, the appellant got registered under work contract service and paying service tax on the amount of services provided by them except for the services provided in the State of Jammu and Kashmir. It was alleged that the appellant had provided taxable services during period from 1.6.2007 to March, 2010-11 - Held that - I hold that for the period post 1.6.2007, if any unpaid demand is found against the appellant under the category of work contract service, the same shall be payable by the appellant. Further, the services provided in the State of Jammu & Kashmir post 1.6.2007, no service tax is payable. The matter is remanded back to the adjudicating authority for calculation of the demand and thereafter issue a demand notice to the appellant within 30 days from the receipt of this order. If there is any outstanding demand, the same shall be payable by the appellant alongwith interest and penalty to the extent of 25% of the service tax payable - appeal allowed by way of remand.

Summary

Issues:
Demand of service tax, interest, and penalty on the appellant for the period post 1.6.2007; Allegation of providing taxable services from 1.6.2007 to March 2010-11; Challenge against the order by the Commissioner (Appeals); Applicability of service tax on services provided in the State of Jammu and Kashmir; Classification of services under commercial or industrial construction service or work contract service.

Analysis:
The appellant appealed against an order demanding service tax, interest, and penalty. The appellant, engaged in construction activity, registered under work contract service from 1.6.2007, except for services in Jammu and Kashmir. A show cause notice alleged taxable services provided from 1.6.2007 to March 2010-11, leading to the demand. The Commissioner (Appeals) ruled no tax was due pre-1.6.2007 and exempted services in Jammu and Kashmir post-1.6.2007, remanding for quantification. The appellant contested the demand, stating timely tax payments and no tax liability for Jammu and Kashmir services post-1.6.2007.

The appellant argued against the demand under commercial or industrial construction service, emphasizing the work contract service classification. The AR supported the impugned order. The Tribunal reviewed the show cause notice, noting the demand for 1.4.2006 to 30.6.2007 under commercial or industrial construction service and for 2008-09 and 2010-11 on taxable services. Upholding the Commissioner's exemption for Jammu and Kashmir services post-1.6.2007, the Tribunal affirmed no tax liability pre-1.6.2007 and for Jammu and Kashmir services post-1.6.2007.

Concluding, the Tribunal upheld the Commissioner's findings, stating no tax for pre-1.6.2007 activities under commercial or industrial construction service and no tax on Jammu and Kashmir services post-1.6.2007. Any unpaid demand post-1.6.2007 under work contract service is payable by the appellant. The matter was remanded for demand calculation and issuance within 30 days. Outstanding demand incurs interest and a 25% penalty. The appeal was disposed of accordingly.