2017 (3) TMI 179 - AT - Service Tax

Extended Period of Limitation - commercial or industrial construction service / works contract service - Penalty - Held that - the clear facts about the intimation given by the appellant and various communications in which the activities have been brought to the notice of the Department on more than one occasion, there is no justification to invoke the proviso to Section 73 (1) of the Finance Act, 1994, in the present facts of the case. We also note that all the work executed by the appellants are in the nature of composite works contracts - As pointed out by the learned Counsel by the appellant, the matter is resolved only by the decision of Hon ble Supreme Court by order dated 20/08/2015 in Larsen & Toubro 2015 (8) TMI 749 - SUPREME COURT - Appeal allowed.

Summary

Issues:
1. Tax liability for commercial or industrial construction service and works contract service.
2. Applicability of limitation for demand in tax liability.
3. Allegations of willful mis-statement and fraud by the appellant.
4. Justification for invoking the proviso to Section 73(1) of the Finance Act, 1994.
5. Legality of demand for extended period and penalty imposition.

Analysis:

1. The Tribunal observed that the appellant's construction activity for commercial use falls under the tax entries "commercial or industrial construction service" and "works contract service." The matter was remanded to the Original Authority for a fresh decision. The appellant's tax liability was recalculated, and a portion was confirmed against them for the period from 10/09/2004 to 31/03/2008.

2. The appellant contended that the demand was time-barred as the notice was issued on 21/10/2009, covering the period in question. The Tribunal noted the appellant's registration under different tax categories over time and their compliance with service tax payments under relevant headings. The Tribunal found no element of fraud or suppression by the appellant.

3. The appellant argued that post a Supreme Court ruling, no service tax liability existed for work done before 01/06/2007. Therefore, a demand for an extended period was legally unsustainable, and the penalty was unjustified. The Commissioner, however, alleged willful mis-statement against the appellant based on incomplete ST-3 returns.

4. The Tribunal found that the appellant had duly informed the Jurisdictional officer about their activities, and there was no justification to invoke the proviso to Section 73(1) of the Finance Act, 1994. The nature of the appellant's work as composite works contracts was acknowledged, and the tax liability was contentious and subject to higher judicial decisions.

5. Considering the facts and legal arguments presented, the Tribunal concluded that the demand for an extended period was not legally sustainable. Consequently, the penalty imposed was also deemed unjustified. The impugned order was set aside, and the appeal was allowed.