2017 (4) TMI 99 - AT - Service Tax

Works contract - assessee claimed exemption from payment of service tax, the items of contract/works being excluded from the purview of the definition of the said service u/s 65 (25b) of FA, 1994 - Department was of the view that the work in question should be considered as part of construction of Hydro Electric Power Project, which is a Commercial Project leviable to service tax - Held that - the contract with WBSEB was a Works Contract as defined u/s 65(105)(zzzza) of the FA, 1994 and came into force from 1st June, 2007, without any change in the definition of Commercial or Industrial Construction Service Section 65 (105)(zzq) or Erection, Commissioning or Installation service Section 65(105)(zzd) or Construction of Complex Service Section 65(105)(zzh) . It implies that the work undertaken by the respondent was not covered under any of the earlier existing services and came under service tax levy as Works Contract only w.e.f. 1st June, 2007 - Only minor part of the demand from June, 2007 to March, 2008, which is included in the demand of ₹ 4,39,181/- for the period April, 2007 to March, 2008 survives and the balance of the demand does not exist. The appeal filed by the Department is not maintainable under Litigation Policy - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal filed by Revenue against Order-in-Original dated 15.06.2009 passed by Commissioner of Service Tax, Kolkata.
- Determination of service tax liability on a contract for construction work.
- Interpretation of the definition of "Works Contract" under Section 65(105)(zzzza) of the Finance Act, 1994.
- Applicability of service tax on the contract with West Bengal State Electricity Board.

Analysis:
The case involved an appeal by the Revenue against the Order-in-Original dated 15.06.2009 passed by the Commissioner of Service Tax, Kolkata. The dispute revolved around the service tax liability on a contract for construction work undertaken by M/s Taisei Corporation for the West Bengal State Electricity Board. The appellant claimed exemption from service tax based on the exclusion of certain items of the contract under Section 65(25b) of the Finance Act, 1994.

Upon hearing arguments from the Department's Special Counsel, it was noted that the contract with the West Bengal State Electricity Board constituted a "Works Contract" as defined under Section 65(105)(zzzza) of the Finance Act, 1994. The Tribunal observed that the contract fell under the purview of service tax as a "Works Contract" effective from 1st June 2007, as per the decision in the case of CCE Vs. Larsen & Toubro Ltd. The demand for service tax was recalculated, with only a minor portion surviving for the period from June 2007 to March 2008.

The Tribunal further analyzed the demand amounting to ?4,39,181, which was deemed to fall under the Litigation Policy. Consequently, the appeal filed by the Department was considered not maintainable under the Litigation Policy. As a result, the Tribunal dismissed the appeal by the Department and upheld the impugned order passed by the Commissioner of Service Tax, Kolkata.