2018 (5) TMI 833 - AT - Service Tax

Classification of services - services were provided under the works contract to Delhi Metro Rail Corporation (DMRC) as a main contractor or as a sub-contractor of M/s IDEB - whether classified under Commercial and Industrial Construction Service or not? - Held that - the Tribunal in the case of AFCONS Infrastructure Limited vs CCE, Mumbai-II 2013 (8) TMI 530 - CESTAT MUMBAI has held that the construction for DMRC are not liable to service tax under CICS as DMRC was covered in the exclusionary clause of Section 65(25b) of the Finance Act, 1994. The services rendered to DMRC would be covered in the exclusionary clause of WCS under Section 65(105)(zzzza) - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax demand raised for the period October 2004 to September 2009 under "Commercial and Industrial Construction Service".
2. Determination of whether services provided under works contract to Delhi Metro Rail Corporation (DMRC) fall outside the scope of CICS/WCS.
3. Clarification on the qualification of services rendered to railways and whether services to M/s IDEB would qualify as service rendered to railway.
4. Interpretation of the taxability of services rendered under works contract prior to 01.06.2007.
5. Application of exclusionary clause of Section 65(25b) of the Finance Act, 1994 to services rendered to DMRC.

Analysis:

1. The appeals were filed against the Order-in-Original dated 29.03.2014, where a service tax demand was raised for the period October 2004 to September 2009 under "Commercial and Industrial Construction Service". The appellant contested the order, leading to the present appeals.

2. The appellant argued that the services provided under the works contract to DMRC, either as a main contractor or sub-contractor of M/s IDEB, fell outside the scope of CICS/WCS. It was contended that the services were contract services, not subject to the service tax under the relevant category.

3. The Revenue, represented by Sh. Sanjay Jain, contended that the services provided to DMRC were not equivalent to services rendered to railways. Additionally, even if DMRC was considered to be railways, the services rendered to M/s IDEB would not qualify as services rendered to railways, raising a question on the classification for tax purposes.

4. Upon hearing both sides and examining the records, the Tribunal noted that services rendered under works contract prior to 01.06.2007 were not taxable, citing the decision of the Supreme Court in Larsen & Toubro Limited vs. CCE-2015 (39) STR 913 (SC) as precedent for this interpretation.

5. Referring to the case of AFCONS Infrastructure Limited vs CCE, Mumbai-II- 2015 (38) STR 194 (Tri. Mum.), the Tribunal held that construction for DMRC was not liable to service tax under CICS, as DMRC fell within the exclusionary clause of Section 65(25b) of the Finance Act, 1994. Consequently, the services rendered to DMRC would be covered under the exclusionary clause of WCS, as per the rationale established in the AFCONS Infrastructure Limited case. Therefore, the impugned order was set aside, and all appeals filed by the appellant were allowed.