2018 (10) TMI 1479 - AT - Service Tax

Levy of tax - Works contract service - Construction of Complex Service - construction of residential houses - demand w.e.f 1.6.2007 - Held that - The appellant had rendered the services under the heading Works Contract Service , for which there is no proposal in the show cause notice for payment of tax. Held that - The ld. Commissioner has, for the same activity, held that prior to 1.6.2007, the appellant/assessee is taxable under the category Construction of Complex Service and further held that w.e.f. 1.6.2007, the same work will appropriately be taxable under Works Contract Service as under all these contracts executed during the disputed period, the transfer of property in goods is involved in the execution of contract and as such the goods were liable to sales tax under the Sales Tax Act and accordingly, the conditions for classifying the goods under the heading Works Contract Service were satisfied. The confirmation of demand for the period post 1.6.2007 under the category of Works Contract Service is bad, as there is no proposal in the show cause notice for payment of service tax under this category - the demand in the show cause notice was under the category of Construction of Complex Service . Appeal allowed - decided in favor of appellant.

Issues:
1. Whether the services rendered fall under "Work Contract Service" or "Construction of Complex Service" for the construction of residential houses.

Analysis:
The judgment revolves around the issue of whether the appellant's services should be categorized as "Work Contract Service" or "Construction of Complex Service" for the construction of residential houses. The Commissioner found that the services provided by the appellant, including construction of LIG, MIG houses for a housing board, fell under the definition of "Construction of Complex" service. It was noted that the buildings developed by the housing board had more than 12 residential units along with common facilities, meeting the criteria for a residential complex. The Commissioner emphasized that even if individual buildings had fewer units, collectively they constituted a complex if the total number exceeded 12 units. The appellant argued that their constructions were standalone houses, not complexes, but the Commissioner disagreed based on the common facilities and large number of houses in the colonies. The Commissioner cited legal precedents and work orders to support the classification of the services as "Construction of Complex Service."

The Tribunal examined the contentions and observed that the appellant had indeed rendered services under the category of "Works Contract Service," for which no tax proposal was made in the show cause notice. The demand for tax was based on "Construction of Complex Service" as defined under specific sections. The Tribunal highlighted the Commissioner's findings that prior to a certain date, the services were taxable as "Construction of Complex Service," but post that date, they should be classified as "Works Contract Service" due to the involvement of goods transfer in the contracts. The Commissioner had also allowed an abatement towards the material component. However, the Tribunal noted that the demand post the specified date under "Works Contract Service" was not proposed in the show cause notice, which was crucial. Therefore, the Tribunal concluded that the confirmation of demand under "Works Contract Service" post the specified date was inappropriate, as the show cause notice only mentioned tax liability under "Construction of Complex Service."

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits as per the law. The judgment clarifies the distinction between "Work Contract Service" and "Construction of Complex Service" based on the nature of services provided and the applicable tax liabilities, emphasizing the importance of adherence to the specifics mentioned in show cause notices for tax demands.

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