2018 (11) TMI 744 - AT - Service Tax

Classification of services - Erection, commissioning and installation Services or not - service to various petrol pumps of Hindustan Petroleum Corporation Limited (HPCL) - extended period of limitation - Held that - The services provided by the appellant are more appropriately classifiable under commercial or industrial construction service rather than erection, commissioning and installation agency service. The work orders as reproduced indicate that work given to the appellant by M/s HPCL is inclusive of material and labour charges and therefore they are more in the nature of Work-Contract service rather than erection, commissioning or installation service. Since, the work contract service has come to be enacted with effect from 01/06/2007 and therefore the demand prior to 01/06/2007 is not sustainable on this very ground. For the period beyond 01/06/2007 the activity is purely classifiable as work contract service - For the period from 01/06/2007 to 2nd October, 2008 also services provided by the appellant are more of the nature of the work contract service and since they have already deposited the service tax under the category of commercial or industrial construction service, there is no lacuna or short payment of the service tax in this regard. Extended period of limitation - Held that - The department has already been aware about the issue and therefore there is no ground for invoking the extended time proviso under Section 73 of Finance Act, 1994 and therefore the demand beyond the period of normal period is barred by limitation and hence not sustainable. Appeal allowed - decided in favor of appellant.

Issues involved:
1. Classification of services provided by the appellant under the category of erection, commissioning, and installation services.
2. Determination of service tax liability for the period from April 2005 to October 2008.
3. Examination of whether the demand for service tax is barred by the period of limitation.
4. Analysis of work orders and contracts entered into by the appellant with Hindustan Petroleum Corporation Limited.
5. Comparison of the services provided by the appellant with the definitions of erection, commissioning, and installation services as per the Finance Act, 1994.

Issue 1: Classification of services provided by the appellant under the category of erection, commissioning, and installation services:
The appellant contended that the services they provided, including construction of buildings, boundary walls, roads, and other activities, do not fall under the category of erection, commissioning, or installation as per the definitions provided in the Finance Act, 1994. They argued that their activities are more appropriately classified under commercial or industrial construction services, for which they have discharged their service tax liability.

Issue 2: Determination of service tax liability for the period from April 2005 to October 2008:
The appellant claimed that since the work contract service was not in existence before June 2007, their activities during the period from April 2005 to May 2007 should not be subject to service tax liability. For the period from June 2007 to October 2008, they argued that the services provided were primarily for construction, which falls under exempted services as per the provisions of commercial or industrial construction services.

Issue 3: Examination of whether the demand for service tax is barred by the period of limitation:
The appellant contended that the demand for service tax was barred by the period of limitation, as the issue had been thoroughly examined by the department during an audit conducted in April 2008. They argued that the department had already concluded that the audit objections were not legally sustainable, and therefore, the demand beyond the normal period should not be upheld.

Issue 4: Analysis of work orders and contracts entered into by the appellant with Hindustan Petroleum Corporation Limited:
The Tribunal examined the work orders provided by the main client, Hindustan Petroleum Corporation Limited, and concluded that the services undertaken by the appellant were more aligned with commercial or industrial construction services rather than erection, commissioning, or installation services. The work orders indicated that the services were inclusive of material and labor charges, resembling work-contract services.

Issue 5: Comparison of the services provided by the appellant with the definitions of erection, commissioning, and installation services as per the Finance Act, 1994:
The Tribunal compared the services provided by the appellant with the definitions of erection, commissioning, and installation services under the Finance Act, 1994. It was observed that the appellant's activities, such as construction of buildings, roads, and other infrastructure, did not align with the scope of erection, commissioning, or installation services, but rather fell under commercial or industrial construction services.

This detailed analysis of the judgment highlights the key legal arguments, interpretations of relevant statutes, and the Tribunal's findings on each issue involved in the case.

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