2017 (12) TMI 90 - AT - Service Tax

Abatement - classification of services - case of Revenue is that the construction services would come under completion and finishing services which is only sub-category of Commercial or Industrial Construction Service - Held that - the issue whether works contract service is subject to levy of service tax prior to 1.6.2007 has been settled by the judgment of the Apex Court in the case of Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT . The appellant having accepted the liability after 1.6.2007 and for re-quantification of demand for this period, the matter is required to be remanded, which we hereby do. Penalty - Held that - the issue of classification of this service was a matter of dispute and therefore the penalties imposed are unwarranted and requires to be set aside. Appeal allowed in part and matter on remand for purpose of re-quantification.

Summary

Issues:
1. Eligibility for abatement under Commercial or Industrial Construction Service.
2. Applicability of service tax liability for the period before and after 1.6.2007.
3. Imposition of penalties based on the classification of services.

Analysis:
1. The appellants were registered under the category of 'Commercial or Industrial Construction Service' and availed 67% abatement as per Notification No. 15/2004-ST. The department contended that the activities undertaken by the appellants were finishing and completion services, not eligible for abatement. After adjudication, the demand was confirmed with interest and penalties imposed. The issue of eligibility for abatement was crucial in this case.

2. During the hearing, it was argued that the demand before 1.6.2007 was not sustainable based on a Supreme Court judgment. For the period after 1.6.2007, the appellant accepted liability, requesting a remand for quantification. The matter of levy of service tax on works contract services had been settled by the Supreme Court. The penalties imposed were challenged as unwarranted due to the interpretational nature of the issue.

3. The Tribunal acknowledged the settlement on service tax levy pre-2007 and accepted the liability post-2007, remanding for re-quantification. The dispute over the classification of services led to penalties being set aside. The impugned order was modified to set aside demands pre-2007, penalties, and remand for re-quantification post-2007. The appeal was partly allowed based on these considerations.

This comprehensive analysis covers the issues of abatement eligibility, service tax liability, and penalties, providing a detailed breakdown of the Tribunal's decision and the legal arguments presented during the case.