2018 (8) TMI 813 - AT - Service Tax

Demand raised by invoking extended period of limitation - penalty - the demand primarily stands confirmed against the appellant on the ground that during the period relevant for the purposes of said appeal they had provided service falling under the category of site formation and supply of tangible goods services - Held that - The fact whether principal contractors have discharged the service tax liability for the full amount is required to be verified - the matter needs re-examination based upon verification of the facts relatable to payment of service tax on the full value of the contract. The appellants have also taken a stand that some of the services supplied by them were relatable to the road construction or bridge construction services, which were exempted. As the matter is being remanded to the Original Adjudicating Authority, he would also examine the above stand of the appellant. Appeal allowed by way of remand.

Issues:
1. Confirmation of service tax liability against the appellant for the period April 2005 to March 2010.
2. Imposition of penalties under Sections 78 and 77 of the Finance Act, 1994.
3. Grounds for confirming the demand against the appellant.
4. Verification of service tax liability by principal contractors.
5. Examination of services related to road and bridge construction.
6. Remand of the matter to the Original Adjudicating Authority for re-examination.

Analysis:

1. The Appellate Tribunal confirmed a service tax liability of approximately ?1.63 crores against the appellant for the period April 2005 to March 2010 by invoking the longer period of limitation. Penalties under Sections 78 and 77 of the Finance Act, 1994 were also imposed on the appellant.

2. The demand was primarily confirmed against the appellant for providing services falling under the categories of "site formation" and "supply of tangible goods." The appellant claimed to work as a subcontractor for main contractors and argued that the demand had also been confirmed against the main contractors for the full value of services, including those provided by the appellant. The Tribunal directed verification of whether principal contractors had discharged the service tax liability for the full contract amount.

3. The appellants contended that some of the services they provided were related to exempted road or bridge construction services. The matter was remanded to the Original Adjudicating Authority for examination of this claim, along with the plea of limitation and penalty, which were left open for reconsideration based on the decision on merits.

4. The Tribunal emphasized that a re-examination of the facts related to the payment of service tax on the full value of the contract was necessary. The Original Adjudicating Authority was instructed to provide the appellants with a reasonable opportunity to raise all grounds and make submissions.

5. The Tribunal clarified that they had not assessed the merits of the case or expressed any opinion on the issues involved. Consequently, the appeal was allowed by way of remand, indicating a need for further examination and consideration by the Original Adjudicating Authority.

This comprehensive analysis outlines the key aspects of the judgment, including the confirmation of service tax liability, penalties imposed, grounds for the demand against the appellant, verification of service tax liability by principal contractors, examination of services related to construction, and the remand of the matter for re-examination by the Original Adjudicating Authority.

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