2018 (10) TMI 1205 - AT - Service Tax

Short paid/not paid Service Tax - income in respect of the services shown in the balance sheet for the period 2005-06 to 2007-08 - Composite works contract services - Penalties - Held that - The work order for repair supply fixing of cow catchers at State warehouse is a composite contract including supply of material and the benefit of composition scheme is to be extended to the assessee-Appellants as they have intimated to the Department about the exercise of the said option - on this short ground alone, matter remanded to the original authority for quantification of Service Tax to be paid under composition scheme - penalties set aside - appeal allowed by way of remand.

Summary

Issues: Service Tax liability on civil and commercial construction work and Management Maintenance or repair services for the period 2006-08.

Analysis:
1. The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise, Jaipur, regarding Service Tax liability for the period 2006-08. The assessee-Respondents were engaged in civil and commercial construction work and Management Maintenance or repair services. The audit revealed non-payment/short payment of Service Tax on income related to services shown in the balance sheet for 2005-06 to 2007-08. A show cause notice was issued, demanding payment of Service Tax, interest, and penalties under relevant sections of the Act.

2. The adjudicating authority confirmed the demands, stating that services like repair work, supply and fixing of cow catchers, electrification work at state warehouse, anti-termite treatment, and construction of godowns, roads, and drains fall under the definition of "CICS and MMR services" as per the Act. The authority noted that repair, maintenance, and modernization of existing roads are covered under "Management, Maintenance & Repair services." An exemption under Notification No. 24 dated 27.07.2009 applies only to the construction of new roads.

3. Upon appeal, the Service Tax demand for maintenance or repair of roads provided to PWD was dropped, but the demand for construction of godowns/warehouses for Rajasthan State Warehousing Corporation under the category of CICS was upheld. The assessee-Appellants challenged this decision by filing the present appeal.

4. After hearing both parties and examining the records, the Tribunal found that the work order for repair, supply, and fixing of cow catchers at the State warehouse constituted a composite contract, including the supply of material. The Tribunal held that the composition scheme benefit should be extended to the assessee-Appellants as they had informed the Department about exercising this option. Consequently, the matter was remanded to the original authority for quantification of Service Tax under the composition scheme, considering the tax already paid under Works Contract Services. Penalties under relevant sections were set aside.

5. As a result, the appeal by the assessee-Appellants was partly allowed through remand, providing clarity on the application of the composition scheme and directing the original authority to reevaluate the Service Tax liability accordingly.