2018 (6) TMI 338 - AT - Service Tax

Construction Service - Commercial or Industrial Construction service - scope of term Commercial Concern - Non-payment of Service tax - failure to take registration - demand of service tax with Interest and Penalty - invocation of extended period of limitation - Held that - With effect from 01.05.2006, the definition of Commercial or Industrial Construction service stands amended and has been made applicable to any person . Consequently, the appellant will be liable for making payment of service tax w.e.f. 01.05.2006 - Since the appellant has failed to take out registration or failed to file statutory returns, the Revenue is fully justified in raising the demand by invoking the extended period of limitation available under Section 73 - the demand of service tax w.e.f. 01.05.2006 is sustained. Penalties - Held that - The service tax demand along with interest has already been discharged by the appellant even prior to the issuance of SCN dated 19.11.2007. Consequently, the department is not justified in imposing penalties - penalties set aside by invoking section 80. The demand up to 30.04.2006 is set aside, but sustained for the period from 01.05.2006 - penalties also set aside - appeal allowed in part.

Summary

Issues:
Challenge to Order-in-Appeal dated 24.02.2010 regarding demand of service tax for the period 2004-05 to 2006-07. Appellant's liability as an individual for construction services provided. Justification of invoking extended period of limitation under Section 73. Appellant's payment of service tax before issuance of SCN.

Analysis:

1. Applicability of Construction Service Definition:
The appellant contested the demand of service tax, arguing that as an individual service provider, they did not fall under the definition of a "commercial concern" before 01.05.2006. This argument was supported by Circulars issued by the CBEC. The Tribunal acknowledged that the appellant, being an individual, was not covered under the definition of a "commercial concern" until 01.05.2006. Therefore, the levy of service tax for the period up to 30.04.2006 was set aside.

2. Liability Post-Amendment of Definition:
From 01.05.2006, the definition of construction service was amended to include "any person." Consequently, the appellant became liable for service tax from this date onwards. The Tribunal noted that the appellant had failed to register or file statutory returns, justifying the Revenue's invocation of the extended period of limitation under Section 73. Therefore, the demand for service tax from 01.05.2006 was upheld.

3. Payment of Service Tax and Penalties:
It was observed that the appellant had already paid the service tax along with interest before the issuance of the Show Cause Notice (SCN) dated 19.11.2007. As a result, the Tribunal deemed the imposition of penalties unjustified. Citing Section 80 of the Finance Act, 1994, the Tribunal waived the penalties, considering it a fit case for such action.

In conclusion, the Tribunal set aside the demand for service tax up to 30.04.2006 but upheld it from 01.05.2006 onwards. Additionally, the penalties were waived, and the appeal was allowed with any consequential reliefs.