2009 (2) TMI 127 - AT - Service Tax

Demand and Recovery of Service Tax extended period of limitation - alleged that appellants had not included the value of Piling works undertaken by them for the construction of new Commercial and Industrial Construction Works as well as the Residential Complexes in the taxable value for the purpose of assessment and discharge of service tax liability. It was also noticed by the authorities that the services rendered by the appellant for soil testing and survey work would fall under the category of Consulting Engineer Services and the amount collected by the appellant for such services has escaped assessment and discharge of service tax liability Tribunal upheld demand of service tax on piling works but remanded the matter for re-quantification but for soil testing and survey work held as non taxable in view of new service introduced from 16-6-2005 as Site Formation and Clearance, excavation and earthmoving and demolition.

Issues Involved:
1. Classification of Soil Testing and Survey Work.
2. Demand of Service Tax and Education Cess for various services.
3. Time-barred claims for Service Tax on Piling Work.
4. Deductions under Notification No. 17/2005-ST.
5. Calculation of Service Tax on amounts not received.
6. Interest and Penalties under various sections of the Finance Act, 1994.

Detailed Analysis:

1. Classification of Soil Testing and Survey Work:
The Adjudicating Authority classified soil testing and survey work under "Consulting Engineer Services." The appellant contested this, arguing that these services should fall under "Site formation and clearance, excavation and earthmoving and demolition" and "Survey and map making other than Government departments," which came into effect from 16-6-2005. The Tribunal agreed with the appellant, referencing various case laws indicating that services introduced later cannot be retroactively classified under an earlier category. Thus, soil testing and survey work prior to 16-6-2005 should not be classified under Consulting Engineer Services.

2. Demand of Service Tax and Education Cess:
The show-cause notice demanded service tax for piling work on commercial buildings, residential complexes, soil testing, and survey work. The Tribunal upheld the service tax liability for piling work on commercial buildings and residential complexes but required re-quantification for soil testing and survey work, limiting the liability from 16-6-2005 onwards.

3. Time-barred Claims for Service Tax on Piling Work:
The appellant argued that the demand for service tax on piling work for commercial buildings from 10-9-2004 to 18-4-2005 was time-barred. The Tribunal rejected this argument, emphasizing that the appellant had registered for service tax on 29-11-2004 and was obligated to discharge tax liabilities from that date. Thus, the claim was not time-barred.

4. Deductions under Notification No. 17/2005-ST:
The appellant claimed deductions under Notification No. 17/2005-ST for services related to infrastructure projects. The Tribunal directed the lower authority to consider these deductions while re-quantifying the service tax liability.

5. Calculation of Service Tax on Amounts Not Received:
The appellant argued that service tax should only be calculated on amounts actually received. The Tribunal agreed, directing the lower authority to re-quantify the tax liability based on amounts received, excluding amounts not yet received.

6. Interest and Penalties:
The Tribunal held that the appellant is liable to pay interest on the re-quantified amount of service tax. The case was remanded to the lower authority to reconsider the imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994, after re-quantifying the service tax liability.

Conclusion:
The appeal was disposed of with directions to the lower authority to re-quantify the service tax liability considering deductions under Notification No. 17/2005-ST and amounts actually received. The lower authority was also directed to reconsider the imposition of penalties based on the re-quantified amount.

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