2017 (7) TMI 250 - AT - Service Tax

Works Contract Service - the entire contract is with railways and the entire work under contract was provided along with goods - Held that - The work contract tax was also deducted by the railways from the contract value and the appellants have also paid the works contract tax, in such a situation, service is prima facie covered under works contract service, which became taxable with effect from 01/06/2007 and prior to that it was not taxable - However, the fact whether the contract is provided along with goods and works contract tax deducted by the service recipient/paid by the appellants has not been considered by the adjudicating authority - matter on remand. Transportation of goods by road services - demand - Held that - the appellant forcefully submitted that major value of services is related to the freight expenses which is below ₹ 750/- per trip. If it is so, it is clearly covered by the Notification No.34/2004-ST. However, this factual position has not been properly considered by the adjudicating authority - matter requires reconsideration. Construction service - demand - Held that - the appellants were given reconciliation statements according to which there will be no demand exist on construction service. However, reconciliation was not dealt with in proper perspective by the adjudicating authority. As per our above discussion, the entire matter needs reconsideration. Appeal allowed by way of remand.

Issues:
1. Classification of services as management, maintenance, or repair services or works contract services.
2. Taxability of services provided to railways under different categories.
3. Time bar for demand raised.
4. Taxability of transport of goods by road services.
5. Demand under construction services for specific periods.

Detailed Analysis:
1. The appellant argued that the services classified as management, maintenance, or repair services should be considered as works contract services due to the inclusion of material and payment of works contract tax. The appellant contended that the demand was not sustainable as works contract services were not taxable before 01/06/2007, citing the Supreme Court's decision in L&T Ltd. The appellant also highlighted exclusions related to services provided to railways post-01/06/2007. Additionally, the appellant argued against the inclusion of services under repair services based on specific exclusions related to commercial or industrial construction services. Various legal precedents were cited to support these contentions.

2. The appellant further argued that even if repair services were taxable, only the service portion should be taxed when provided along with material. The appellant referenced a Supreme Court decision in Bharat Sanchar Nigam Ltd. to support this argument. Exemptions related to construction services for non-commercial government buildings were also discussed, citing relevant circulars and legal decisions. The appellant emphasized the personal use nature of certain constructions, supported by tribunal decisions, to argue against taxability. The appellant also addressed the time bar issue, asserting that the demand for the extended period should be time-barred due to the lack of suppression of facts.

3. Regarding the taxability of transport of goods by road services, the appellant contended that the absence of consignment notes rendered the demand unsustainable. Legal decisions were cited to support this argument, emphasizing the importance of consignment notes in determining tax liability. The appellant also highlighted exemptions related to freight expenses below a specified threshold.

4. The appellant challenged the demand under construction services for specific periods, arguing that proper reconciliation statements were not considered by the lower authorities. The appellant asserted that there was no differential value liable for service tax under construction services and pointed out minor errors in the calculations. The appellant sought a reevaluation of the reconciliation statements to address the demand raised for the specified periods.

5. The Revenue argued that certain submissions were not presented before the adjudicating authority, necessitating a remand for further consideration. The Revenue highlighted the need for proper reconciliation related to transport of goods by road services and construction services. The Tribunal, after considering both sides' submissions, found merit in the appellant's arguments regarding works contract services, transport services, and construction services. The Tribunal remanded the matter to the adjudicating authority for a fresh order, emphasizing the need to consider all relevant facts and observations presented during the appeal process.

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