2016 (12) TMI 33 - AT - Service Tax

Demand - Composition scheme - Period of limitation - erection commissioning and installation services as also under commercial and industrial construction services - Held that - in the case of Subhash Knandelwal & Sons 2011 (7) TMI 940 - CESTAT NEW DELHI wherein it was observed that non-disclosure of information of services of pre-commissioning undertaken by the assessee and such fact noticed by department during the course of audit will not lead to invocation of longer period of limitation when there is no positive act of suppression against the appellant - appeal allowed.

Summary

Issues:
1. Liability for service tax prior to 1.6.2007
2. Inclusion of free supply items in the value of services
3. Applicability of abatement under Notification No. 1/2006-ST
4. Invocation of longer period of limitation for demand confirmation

Analysis:

1. Liability for service tax prior to 1.6.2007:
The dispute in the case revolved around whether the appellants were liable to pay service tax for activities undertaken before 1.6.2007. The appellants argued that their activities, which involved civil construction work, did not amount to installation or commissioning of plant, machinery, or equipment. The Tribunal referred to previous decisions to support the appellants' claim, emphasizing that activities like civil construction work for petrol pumps, which are necessary for installation of machinery, do not attract service tax liability. Therefore, the Tribunal ruled in favor of the appellants, rejecting the Revenue's stand.

2. Inclusion of free supply items in the value of services:
The appellants contended that the value of free supply items, such as pumps and tanks, should not be considered in the total value of services provided. The Tribunal cited previous cases where it was held that the value of free supply items cannot be included in the service value. The Tribunal's decision was consistent with these precedents, supporting the appellants' argument and further weakening the Revenue's case.

3. Applicability of abatement under Notification No. 1/2006-ST:
The appellants also claimed the benefit of abatement up to 67% under Notification No. 1/2006-ST. While the judgment did not delve deeply into this issue, it can be inferred that the Tribunal likely accepted this claim based on the overall decision in favor of the appellants and the rejection of the Revenue's contentions.

4. Invocation of longer period of limitation for demand confirmation:
The Revenue had confirmed the demand by invoking the longer period of limitation. However, the Tribunal noted that non-disclosure of information regarding pre-commissioning services, without any positive act of suppression, does not warrant the invocation of the longer period of limitation. Citing a previous case, the Tribunal held that the demand was barred by limitation, further strengthening the appellants' position.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the assessee due to the lack of merit in the Revenue's arguments and the limitations on demand confirmation.