2018 (9) TMI 86 - AT - Service Tax

Classification of services - Erection Commissioning and Installation Services or Works Contract Services? - appellant provided services to various clients including M/s. Uttar Haryana Bijli Vitran Nigam Shri Guru Granth Sahib World University M/s. H.P. Singh & Others M/s. Greater Mohali Area Development Authority M/s. Punjab Small Scale Industries & Export Corporation Limited etc.re engaged in the supply and installation of electric works laying/ shifting of High Transmission lines street lightning system etc. Held that - It is fact on record that the appellant has provided the services in question along with material. Therefore the classification of the services is Works Contract as per the decision of Hon ble Apex Court in the case of Larsen & Toubro 2015 (8) TMI 749 - SUPREME COURT wherein the Hon ble Apex Court held that any service provided along with material falls under the category of Works Contract therefore prior to 01.07.2012 the service tax liability is not sustainable against the appellant under the category of Erection Commissioning and Installation Services . For the period post 01.07.2012 in terms of exemption Notification No. 25/2012-ST dated 20.06.2012 the services provided to government organisations or a local authority by way of construction erection commissioning installation completion fitting out repair maintenance renovation or alteration of civil structure or any other original works meant predominantly for use other than for commerce industry or any other business or profession was exempt from payment of duty. Admittedly the appellant is providing the said services to government organisation namely M/s. Uttar Haryana Bijli Vitran Nigam Shri Guru Granth Sahib World University M/s. Greater Mohali Area Development Authority M/s. Punjab Small Scale Industries & Export Corporation Limited are not engaged in any commerce industry or any other business or profession. In that circumstance in terms of Notification No. 25/2012-ST dated 20.06.2012 the services provided to these organisations under contracts mentioned at Serial No 1 to 12 (except serial No. 2 and 3) are exempted from payment of duty. Works contract or Erection Commissioning and Installation Services? - services provided to Guru Granth Sahib University and M/s. H P Singh - Held that - The work was completed before the negative list regime and the service has been provided by the appellant along with goods - it merits classification of the said services under Works Contract - demand of service tax is not sustainable under Erection Commissioning and Installation Services . Time Limitation - Held that - There is no specific allegation against the appellant that they have not paid the service tax with intent to evade payment of service tax. In fact the appellant was providing services to the organisations which are not engaged in any commerce industry or any other business or profession - extended period of limitation not invocable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Demand of service tax along with interest and penalties on the appellant for providing Erection, Commissioning or Installation services without payment of due service tax and legal formalities.
- Classification of services provided by the appellant under Works Contract or Erection, Commissioning, and Installation Services.
- Applicability of service tax liability for the period prior to 01.07.2012 and post 01.07.2012.
- Exemption from payment of service tax for services provided to government organizations under Notification No. 25/2012-ST dated 20.06.2012.
- Invocation of extended period of limitation for demanding service tax.

Analysis:

1. Demand of Service Tax and Penalties:
The appellant was under investigation for not discharging its service tax liability properly while providing Erection, Commissioning, or Installation services. The investigation revealed that the appellant had engaged in such services without paying due service tax and not following legal formalities. Consequently, a show cause notice was issued demanding service tax based on the figures from the balance sheet and Form 26AS provided by the appellant. The demands were confirmed, and penalties were imposed. The appellant appealed against this order.

2. Classification of Services:
The appellant argued that the services provided should be classified under Works Contract service rather than Erection, Commissioning, and Installation Services. The tribunal agreed, citing the decision of the Hon'ble Apex Court in Larsen & Toubro case, stating that any service provided along with material falls under Works Contract. Therefore, the service tax liability for the period prior to 01.07.2012 was not sustainable under Erection, Commissioning, and Installation Services category.

3. Applicability of Service Tax Liability:
For the period post 01.07.2012, the tribunal noted that services provided to government organizations were exempt from payment of service tax under Notification No. 25/2012-ST dated 20.06.2012. As the appellant had provided services to government organizations not engaged in commerce, industry, or any other business, the services were exempt from duty.

4. Extended Period of Limitation:
Regarding the invocation of the extended period of limitation, the tribunal found no specific allegation of intent to evade payment of service tax by the appellant. Since the services were provided to organizations not involved in business activities, the extended period of limitation was deemed inapplicable.

5. Decision and Conclusion:
After analyzing the submissions and legal provisions, the tribunal held that the demands were not sustainable. The impugned order demanding service tax, interest, and penalties was set aside, and the appeal was allowed with consequential relief, if any.