2018 (9) TMI 256 - AT - Service Tax

Classification of services - Interior Decorator Services or Works contract Service? - non-payment of Service Tax - Held that - The activities undertaken by the appellant do not fall in the definition of Interior Decorator Service and the same has been held in the case of Commissioner of Service Tax, Mumbai V. Indecor Slides 2014 (3) TMI 542 - CESTAT MUMBAI - the activities undertaken by the appellant includes supply of material and labour as per the work order placed on record and therefore it constitutes works contract which came into service tax net w.e.f. 01.06.2007 and in the present case, the period of dispute is November 2003 to December 2005 therefore the demand of service tax is not legally sustainable against the appellant - appeal allowed - decided in favor of appellant.

Issues:
- Confirmation of demand of service tax on the appellant along with interest and penalty for providing Interior Decorator Services.
- Interpretation of activities undertaken by the appellant in relation to the definition of "Interior Decorator Service" under the Finance Act 1994.
- Application of principles of ejusdem generis or noscitur asociius in determining the scope of services provided.
- Consideration of whether the activities undertaken by the appellant constitute a works contract subject to service tax.
- Review of the revision order passed by the Commissioner based on the Woodmanns case appeal status.

Analysis:
1. Confirmation of Service Tax Demand: The appeal was filed against the revision order confirming the demand of service tax on the appellant for providing Interior Decorator Services. The Department alleged non-payment of service tax based on the nature of services rendered by the appellant. The adjudicating authority initially dropped the demand, but the Commissioner, through the revisional powers, upheld the demand along with interest and penalty.

2. Interpretation of Activities: The appellant argued that the activities undertaken did not fall under the definition of "Interior Decorator Service" as per the Finance Act 1994. They contended that the services provided involved supply of material and labor, resembling a works contract. The appellant cited various decisions to support their claim that the demand of service tax was not justified based on the nature of their activities.

3. Application of Legal Principles: The appellant invoked the principles of ejusdem generis and noscitur asociius to argue that their services did not align with the category of "Interior Decorator Services." They emphasized that the scope of their work did not involve designing or planning, as required for such classification.

4. Works Contract Consideration: The appellant further supported their argument by referring to a Supreme Court decision and contended that their activities constituted a works contract, thereby falling under the service tax net effective from June 1, 2007. Since the disputed period was from November 2003 to December 2005, they asserted that the demand for service tax was not legally sustainable.

5. Review of Revision Order: The Tribunal, after hearing both parties and examining the records, concluded that the revision order was primarily based on the Woodmanns case appeal status. Upon finding that the activities of the appellant did not meet the criteria for "Interior Decorator Service" and considering the nature of the works contract, the Tribunal set aside the impugned order, thereby allowing the appeal of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, overturning the demand for service tax, interest, and penalty, as the activities undertaken did not align with the definition of "Interior Decorator Service" and were more in line with a works contract, falling outside the service tax ambit for the period in question.

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