9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (9) TMI 1443 - HC - Service TaxClassification of service - Works Contract service - composite contract - Department issued a SCN dated 27th May, 2011 to the Assessee stating that the aforementioned construction projects were entirely commercial in nature and were amenable to service tax under the category of Commercial and Industrial Construction Service - Whether the CESTAT was justified in remanding the matter to the Adjudicating Authority on the question whether the contract in question was a composite works contract and whether it was liable for service tax as such? - Held that - On a plain reading of the SCN, it is apparent that it was never disputed by the Department that what was undertaken by the Appellant was a composite contract of construction which involved labour and service elements. The grant of rebate to the Assessee as noted in the SCN was itself an acknowledgment of this. If that was never in issue, the question of remanding the matter to the Adjudicating Authority for verifying that fact did not arise - The CESTAT had to examine if the nature of the contracts executed by it was such that would be covered by the decision of the Supreme Court in Commissioner of Central Excise, Kerala v. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT . The appeal of the Department is restored to the file of the CESTAT.
Issues:
1. Whether the CESTAT was justified in remanding the matter to the Adjudicating Authority on the question of a composite works contract and service tax liability? Analysis: The case involved the Appellant-Assessee, registered with the Service Tax Department, who undertook two civil construction projects. The Department issued a Show Cause Notice (SCN) claiming service tax under the Commercial and Industrial Construction Service category. The Commissioner dropped the demand, but the Department appealed to the CESTAT. The Assessee argued that no service tax could be charged on composite works contracts pre-2007, citing a Supreme Court decision. The CESTAT agreed but remanded the case to verify if the contracts were indeed composite works contracts. The Appellant contended that there was no dispute that the contracts were composite in nature, making the remand unnecessary. The Department argued that the Assessee raised a new argument before the CESTAT, justifying the remand. The Court noted that the SCN acknowledged the composite nature of the contracts, making the remand redundant. The CESTAT had to determine if the contracts fell under the Supreme Court decision, which distinguished between service contracts and composite works contracts. The Supreme Court clarified that service tax could not be levied on composite works contracts pre-2007. Any exemption notifications for service tax would be irrelevant for such contracts. The Court ruled in favor of the Assessee, setting aside the CESTAT's decision and restoring the appeal. The parties were directed to present relevant contracts before the CESTAT for further proceedings. In conclusion, the judgment addressed the issue of service tax on composite works contracts pre-2007, emphasizing the distinction between service contracts and composite works contracts. The Court ruled in favor of the Assessee, highlighting the redundancy of exemption notifications for such contracts and directing further proceedings before the CESTAT based on the nature of the contracts involved.
|
