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2018 (1) TMI 771 - AT - Service TaxConstruction project of Delhi Haat in INA and Pitampura - commercial nature of the construction undertaken by the respondent - whether classified under Commercial or Industrial Construction Service or otherwise? - Held that - the constructions undertaken by the appellant are in pursuance of composite works contracts and were not liable to be taxed prior to 01.06.2007. The SCN was issued on 27.05.2011. On that date, both the tax entries, namely, Commercial or Industrial Construction Service and Works Contract Service, were available in the Finance Act, 1994. The SCN did mention this in the first para itself. However, the proposal for tax demand was specifically made under Commercial or Industrial Construction Service under Section 65 (105) (zzq) of the Finance Act, 1994. In such situation, it cannot be a case of simple mentioning of wrong provisions of law. Since the impugned order dealt with the tax liability for the whole period only under the Commercial or Commercial or Industrial Construction Service, the same is not sustainable - appeal dismissed - decided against Revenue.
Issues:
1. Classification of construction project for Service Tax liability under "Commercial or Industrial Construction Service" 2. Applicability of tax liability under "Works Contract Service" 3. Correctness of original authority's decision on tax liability Analysis: 1. The appeal addressed the issue of the classification of a construction project for Service Tax liability under the category of "Commercial or Industrial Construction Service." The original authority had dropped the demand of Service Tax based on the finding that the construction undertaken did not fall under this category. The Revenue contended that the construction, which included shops and spaces let out for commercial activities, should be classified as "Commercial or Industrial Construction Service" due to its commercial nature. The Tribunal observed that post-01.06.2007, the activity would be liable to service tax under "Works Contract Service" and directed a re-determination of the tax liability under this category. 2. The Tribunal noted that the High Court directed a re-examination of the nature of contracts executed to determine the applicability of the Supreme Court's decision in M/s L&T Limited. The respondent argued that the contracts were composite in nature and should be taxed only under "Works Contract Service" post-01.06.2007. The Tribunal agreed, emphasizing that the services rendered were not taxable under "Commercial or Industrial Construction Service" for the period before 01.06.2007. The Tribunal upheld that the construction was of a commercial nature and disagreed with the original authority's finding. 3. The Revenue argued that the respondent should be held liable under "Works Contract Service" even though the demand was initially made under "Commercial or Industrial Construction Service." The respondent contested this, stating that the tax liability could not be affirmed under a different service category beyond the scope of the show cause notice. The Tribunal analyzed the legal position, considering the date of the show cause notice and the settled legal position by the Apex Court. It concluded that the constructions were in pursuance of composite works contracts and were not liable to be taxed before 01.06.2007. The Tribunal dismissed the appeal by the Revenue based on this legal position. In conclusion, the Tribunal upheld that the constructions were commercial in nature and should be taxed under "Works Contract Service" post-01.06.2007, dismissing the Revenue's appeal against the original authority's decision.
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