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2018 (6) TMI 1085 - AT - Service TaxCommercial or Industrial Construction Service - Construction of Complex Service - Works Contract Service - denial of benefit of abatement - Held that - During the period of dispute i.e. 2006-11, the appellant has undertaken construction activity for various customers. It can be stated that the services rendered in the form of civil construction involves supply of various goods such as steel, cement etc which get consumed in the process of providing construction service. Such activities are evidently in the nature of Works Contract. The Works Contract Service was included in the statue under Section 65 (105) (zzzza) w.e.f. 01/06/2007 - In the wake of authoritative pronouncement by the Apex Court in the case of L&T Ltd. 2015 (8) TMI 749 - SUPREME COURT , no Service Tax can be levied for the period up to 31/05/2007 - the demand of Service Tax up to 31/05/2007 in respect of all the civil contracts executed by the appellant set aside. On fulfillment of the conditions laid down in the above Scheme, the Tax liability of the appellant will need to be reworked and demanded after extending the benefit of the Composition Scheme for the period w.e.f. 01/06/2007. Non-fulfillment of exercising an option for payment of tax under the Composition Scheme cannot be held as a reason for denial of such concession - Subject to fulfillment of the conditions the service tax liability of the appellants is to be re-calculated based on the Composition Scheme. Time Limitation - Held that - Admittedly the issue of service tax liability on Composite Works Contracts has been a subject matter of large number of litigation and clarifications by the Board. In such a situation, alleging fraud, collusion and willful misstatement on the part of the appellants is not tenable - demand beyond the normal period do not sustain. Appeal disposed off.
Issues:
Challenge to Order-in-Original No. 54/2013-14 dated 30/08/2013 for demand of Service Tax for construction activities from 2006-07 to 2010-11 under various categories including Commercial or Industrial Construction Service, Construction of Complex Service, and Works Contract Service (WCS). Analysis: 1. Classification of Services: The appellant contested the demand for Service Tax under various categories, arguing that the construction work involved both goods supply and service provision, falling under Works Contract Service (WCS) as per Section 65 (105) (zzzza) of the Act effective from 01/06/2007. Citing the Supreme Court's decision in Larsen & Toubro case, it was emphasized that Service Tax for WCS could only be levied from 01/06/2007 onwards. The demand prior to this date was deemed unjustified. 2. Benefit of Time Bar and Penalties: The appellant sought the benefit of time bar, asserting that the Service Tax levy for WCS was a contentious issue resolved only after the Apex Court's judgment in the L&T case. Therefore, suppression could not be attributed to the appellant, warranting a waiver of penalties. The Tribunal was referred to specific contracts exempted from Service Tax by precedent cases. 3. Abatement and Composition Scheme: The appellant claimed entitlement to abatement under Commercial or Industrial Construction Service and WCS (Composition Scheme), even if materials were received free of cost. The argument was made for reworking the Tax liability under the Composition Scheme post-01/06/2007, as non-exercise of this option should not lead to denial of the concession. 4. Extended Period and Penalties: Regarding the extended period for Service Tax liability under Works Contract Service, it was highlighted that the issue had been subject to extensive litigation and clarifications. Allegations of fraud and willful misstatement were deemed untenable, with the liability restricted to the normal period under Section 73. Penalties imposed on the appellants were set aside based on the legal sustainability of invoking the extended period. 5. Conclusion: The Tribunal set aside the demand of Service Tax up to 31/05/2007 for civil contracts, directing a reevaluation under Works Contract Service post-01/06/2007. The matter was remanded to the Adjudicating Authority for a fresh decision in light of the L&T case. The appellant's liability was to be recalculated based on the Composition Scheme, with penalties and extended period constraints not applicable, leading to the disposal of the appeal. Judgment: Appellate Tribunal CESTAT NEW DELHI ruled in favor of the appellant, setting aside the demand for Service Tax pre-01/06/2007, reevaluating the Tax liability under Works Contract Service post-01/06/2007, and allowing for the benefit of the Composition Scheme. Penalties and extended period constraints were deemed inapplicable, leading to the disposal of the appeal.
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