2018 (4) TMI 674 - AT - Service Tax

Classification of services - service of Painting of EHV Line Tower, Aluminium Equipment structure, providing earth pits etc. to Maharashtra State Electrical Transmission Co. Ltd. - classifiable under the category of Management, Maintenance or Repair Service or Erection, Commission or Installation Service? - validity of SCN - Held that - no proper reason and discussion has been made for classification of services in both the heads. On one hand the adjudicating authority viewed that the non-payment was due to lack of professional assistance and on the other hand the larger period of limitation has been invoked and penalty imposed - impugned order is thus cryptic and erroneous. Matter remanded to decide the same afresh after giving the opportunity to the Appellant - appeal allowed by way of remand.

Summary

Issues: Classification of services under "Erection, Commission or Installation Service" and "Management, Maintenance or Repair Service"; Eligibility for deduction on account of value of material sold during service provision; Imposition of penalty and invoking extended period for tax recovery.

Classification of services under "Erection, Commission or Installation Service" and "Management, Maintenance or Repair Service": The case involved a dispute regarding the classification of services provided by the Appellant to Maharashtra State Electrical Transmission Co. Ltd. The Appellant claimed their services fell under "Erection, Commission or Installation Service" and later under "Works Contract," while the adjudicating authority classified them under both "Erection, Commission or Installation Service" and "Management, Maintenance or Repair Service." The Appellant argued that the specific services under the latter category were not specified, and the lower authorities failed to clarify the basis for this classification. The Appellant contended that even if their services were considered under Maintenance and Repair, they should be eligible for a deduction on the value of material sold during service provision. The Tribunal found the adjudicating authority's order to be erroneous and lacking proper reasoning and discussion for the dual classification. Therefore, the case was remanded back for a fresh decision after giving the Appellant an opportunity to be heard.

Eligibility for deduction on account of value of material sold during service provision: The Appellant argued that if their services were classified as Maintenance and Repair, they should be entitled to a deduction based on the value of material sold during the provision of such services. The Tribunal did not provide a specific ruling on this issue in its judgment, as the case was remanded back to the adjudicating authority for a fresh decision.

Imposition of penalty and invoking extended period for tax recovery: The Appellant contested the imposition of a penalty despite being deemed eligible for the benefit of a particular section. They also argued against the invoking of an extended period for tax recovery, citing the apparent lack of professional assistance as a reason for the non-separate recovery of service tax. The Tribunal found the imposition of a penalty and the invocation of the extended period to be erroneous, considering the lack of clarity in the adjudicating authority's decision-making process. As a result, the impugned order was set aside, and the case was remanded back to the adjudicating authority for a fresh decision after affording the Appellant an opportunity to present their case.