2018 (10) TMI 1280 - AT - Service Tax

Construction of Residential Complex Services - Composite contract - short-payment of service tax - whether a composite contract involving provision of service as well as transfer of property in goods could be covered under CICS and RCS from the date of introduction of service tax levy on such services? Held that - The issue stands squarely covered by the decision of this Bench in appellant s own case REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI , where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. The impugned order cannot then sustain and requires to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether a composite contract involving provision of service as well as transfer of property in goods could be covered under Commercial or Industrial Construction Services (CICS) and Residential Complex Services (RCS) from the date of introduction of service tax levy on such services.

Analysis:
The appellant, a construction service provider, was issued a show cause notice for alleged short-payment of service tax under CICS. The notice proposed a demand for service tax liability for the period January 2007 to December 2009, along with interest and penalties under the Finance Act, 1994. The adjudicating authority confirmed a demand of service tax and imposed penalties. The appellant appealed, arguing that the issue of composite contracts was settled by the Supreme Court and a recent decision of the Bench. The Bench found merit in the appellant's assertion, citing previous orders and the Supreme Court judgment. It was established that prior to 1.6.2007, service tax could not be levied on composite works contracts. The activities of the appellant were considered composite works contracts, falling under Works Contract Service post-1.6.2007. The Bench referenced the Finance Minister's budget speech in 2007 and CBEC Circulars to support their conclusion. They held that the impugned order could not sustain and set it aside, allowing the appeal with consequential benefits.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by the parties, and the Bench's decision based on legal precedents and statutory provisions.