2018 (11) TMI 168 - AT - Service Tax

Classification of services - construction of cottges and industrial buildings - Commercial or Industrial Construction Service or works contract service? - Held that - The contracts which were awarded to the appellant herein with Andhra Pradesh Tourism Development Corporation Limited and the Ministry of Defence, categorically indicates that the said construction of cottages and industrial buildings were in fact works contract and there was element of supply of material and service. The issue is now squarely settled by the judgment of Hon ble Apex Court in the case of Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT , where it was held that Works contract were not chargeable to service tax prior to 1.6.2007. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax under the category of "Commercial or Industrial Construction Service" for the period 2004-05 and 2005-06.

Analysis:
The appeal was against an Order-in-Original regarding the demand of service tax for construction services provided by the appellant. The Revenue contended that the construction of cottages and technical buildings fell under the category of Commercial & Construction Services, while the appellant argued that the projects were works contracts. The adjudicating authority upheld the demands and imposed penalties. The appellant cited a judgment by the Apex Court in Larsen & Toubro Ltd., which established that the contracts in question were indeed works contracts. The contracts with Andhra Pradesh Tourism Development Corporation Limited and the Ministry of Defence clearly indicated the nature of the construction work as works contracts involving both material and services.

The Tribunal, after reviewing the submissions and records, concluded that the construction projects were works contracts with elements of material and service supply. Since the period in question predated the introduction of works contract services in the Finance Act, 1994, the judgment of the Apex Court in Larsen & Toubro Ltd. was applicable and favored the appellant. Therefore, the impugned order demanding service tax was deemed unsustainable and was set aside. The appeal was allowed, and the impugned order was overturned by the Tribunal.