2018 (9) TMI 1364 - AT - Service Tax

Classification of Services - whether the services would fall under Commercial & Industrial Construction Service or under Works Contract Services? - Held that - The Tribunal in the case of Gambhir Construction Company 2017 (6) TMI 1107 - CESTAT ALLAHABAD has observed that inasmuch as in the show cause notice, there was no proposal to confirm the demand under the category of Works Contract for the period 01/06/2007 onwards, the demand cannot be confirmed under the said category - demand set aside. Demand for the period prior to 01/06/2007 under Commercial & Industrial Construction Service - Held that - Hon ble Supreme Court decision in the case of CCE & Customs, Kerala vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT , laying down that prior to 01/06/2007, the services cannot be held to be taxable under the category of Commercial & Industrial Construction Service - demand set aside. Appeals disposed off.

Summary

Issues:
1. Classification of services under 'Commercial & Industrial Construction Service' or 'Works Contract Services'.
2. Validity of demand confirmation against the assessee.
3. Appeal by the Revenue against the dropped demand.
4. Pre-01/06/2007 taxability of services under 'Commercial & Industrial Construction Service'.

The judgment pertains to two appeals, one by the assessee and the other by the Revenue, arising from the same impugned order of the Commissioner (Appeals). The dispute revolves around the classification of services provided by the appellants under the categories of 'Commercial & Industrial Construction Service' and 'Works Contract Services'. The Revenue alleged a service tax liability of ?29 lakhs, while the appellants contended that their services fall under 'Works Contract Services' effective from 01/06/2007. The lower authorities confirmed the entire demand, but the Commissioner (Appeals) upheld a demand of ?4.53 lakhs under 'Works Contracts Services', leading to the Revenue appealing against the dropped balance demand.

The assessee's appeal challenges the confirmation of demand on the grounds that the show cause notice did not propose taxing the services under 'Works Contract' category. Relying on a Tribunal decision, the appellants argued that the demand cannot be confirmed under 'Works Contract Services' if not proposed in the notice. The Tribunal, following the precedent, set aside the confirmation of demand against the appellant, thereby allowing the assessee's appeal.

Regarding the Revenue's appeal, the issue was settled in favor of the assessee by a Supreme Court decision, which determined that services could not be taxed under 'Commercial & Industrial Construction Service' before 01/06/2007. Consequently, the impugned order dropping the demand was upheld, and the Revenue's appeal was rejected. Both appeals were disposed of accordingly, maintaining the decisions in favor of the respective parties.

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