2018 (4) TMI 1238 - AT - Service Tax

Composite works contract - abatement under N/N. 15/2004-ST dt. 10.06.2004 - Revenue entertained a view that such abatement is not available to completion and finishing services - period involved is July 2005 to September 2006 - Held that - The admitted fact is that work orders are for execution of composite works contract involving supply of materials involving payment of VAT and provision of labour. As such, these contracts cannot be subjected to tax liability prior to 1.6.2007 as held by the Apex Court in the case of L & T Ltd. 2015 (8) TMI 749 - SUPREME COURT - As such, the whole demand in the present proceedings are not legally sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availability of abatement under Notification No.15/2004-ST for completion and finishing services.
2. Tax liability for composite works contract prior to 1.6.2007.

Analysis:

1. Abatement under Notification No.15/2004-ST:
The appellants, engaged in construction and finishing services under composite works contracts, were paying service tax under the category of 'construction of commercial complex service' and availing abatement under Notification No.15/2004-ST. However, the Revenue contended that such abatement was not applicable to completion and finishing services. This disagreement led to proceedings against the appellant, resulting in the confirmation of differential service tax liability by denying the abatement. The consultant for the appellant argued that the works in question were executed before 1.6.2007 and involved composite nature, as recognized by the Hon'ble Supreme Court in a relevant case. After considering both sides and examining the records, the Tribunal found that the abatement denial was incorrect. The Tribunal ruled that the abatement was available for the services provided, leading to the setting aside of the impugned order and allowing the appeal with consequential relief, if any.

2. Tax liability for composite works contract prior to 1.6.2007:
The demand in question pertained to the period before 1.6.2007, specifically from July 2005 to September 2006. The Tribunal reviewed sample work orders and VAT assessments related to these orders. It was established that the work orders involved composite works contracts that included the supply of materials and labor provision, making them not liable to service tax before 1.6.2007, as per the Supreme Court's decision in a relevant case. Consequently, the Tribunal deemed the entire demand in the proceedings legally unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief as per the law.

In conclusion, the Tribunal's judgment addressed the issues of abatement eligibility and tax liability for composite works contracts before 1.6.2007, ultimately ruling in favor of the appellant based on legal precedents and the specific circumstances of the case.