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2018 (11) TMI 1467 - AT - Service TaxErection, Commissioning and Installation Service - Non-payment of Service tax - works contract service - non-payment on the ground that the services performed for road, bridges etc. is excluded from the service tax purview under section 65(105)(zzzza) of the Finance Act, 1994 - period involved in the present case is July 2007 to September 2011 - Held that - The contract entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service. The Tribunal in the case of Real Value Promoters Ltd. 2018 (9) TMI 1149 - CESTAT CHENNAI had occasion to analyze the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only - The demand of service tax under ECIS cannot sustain after the period 1.6.2007. CENVAT Credit - rent-a-cab prior to 1.4.2011 - Held that - The denial of CENVAT credit on rent-a-cab service being prior to 1.4.2011 is unjustified and the assessees are eligible to avail CENVAT credit on the same. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of services under ECIS versus Works Contract Service (WCS). 2. Eligibility of CENVAT credit on rent-a-cab services. 3. Validity of demand and penalties imposed under ECIS for composite contracts post-1.6.2007. Detailed Analysis: 1. Classification of Services under ECIS versus Works Contract Service: The primary issue revolves around whether the services provided by the assessee, which involve composite contracts (both supply of materials and rendering of services), should be classified under Erection, Commissioning, and Installation Services (ECIS) or Works Contract Service (WCS). The Tribunal referred to the precedent set in the case of Real Value Promoters Ltd. vs. CCE, which established that post-1.6.2007, composite contracts should be classified under WCS. The Tribunal reiterated that contracts involving both services and materials, post-1.6.2007, fall under WCS as per Section 65(105)(zzzza) of the Finance Act, 1994. This classification is supported by the Union Finance Minister's budget speech in 2007, which introduced an optional composition scheme for service tax on works contracts. 2. Eligibility of CENVAT Credit on Rent-a-Cab Services: The Tribunal also addressed the issue of CENVAT credit on rent-a-cab services. It was noted that the period in question was prior to 1.4.2011, during which such services were eligible for CENVAT credit. The Tribunal found the denial of CENVAT credit on rent-a-cab services to be unjustified and ruled in favor of the assessee. 3. Validity of Demand and Penalties Imposed under ECIS for Composite Contracts Post-1.6.2007: The Tribunal examined the validity of the demands and penalties imposed under ECIS for the period post-1.6.2007. It was concluded that service tax on composite contracts should be levied under WCS and not under ECIS. The Tribunal referenced multiple decisions, including those in the cases of Swadeshi Construction Company, Skyway Infra Projects Pvt. Ltd., and URC Construction (P) Ltd., which supported the classification of composite contracts under WCS. Consequently, the demands and penalties imposed under ECIS for composite contracts post-1.6.2007 were deemed unsustainable. Conclusion: The Tribunal held that the service tax demands under ECIS for the period post-1.6.2007 could not be sustained for composite contracts, which should be classified under WCS. The denial of CENVAT credit on rent-a-cab services was found to be unjustified, and the assessee was entitled to such credit. The impugned orders were set aside, and the appeals filed by the assessee were allowed with consequential relief. Appeals filed by the Revenue were dismissed, and the cross-objections by the assessee were disposed of accordingly. The miscellaneous application by Revenue for a change of cause title was allowed. Operative Portion: The Tribunal pronounced the operative portion of the order in open court, confirming the decisions and reliefs granted as discussed.
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