2018 (12) TMI 75 - AT - Service Tax

Classification of services - Works contract - Continuing contracts - Held that - The activities undertaken by the appellant falls within the works contract service and liable to the benefit of Works Contract Act subsequent to 01.06.2007 in view of the decision of the Hon ble Supreme Court in case of Commr. Of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT . Extended period of limitation - Held that - It is on record that for the previous period department had been issuing the show cause notice which was subject matter of appeal before this Tribunal - the department is precluded from invoking the extended period for raising of the demand in view of the decision in the case of Ramdev Blocks vs. Commissioner of Central Excise 2016 (12) TMI 81 - CESTAT MUMBAI - the entire demand is time barred. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against service tax demand, classification of services under various contracts, demand barred by limitation, invocation of extended period of limitation, eligibility for benefit under Composition Scheme, undervaluation of taxable consideration, interpretation of law regarding works contract service classification.

Classification of Services under Contracts:
The appeal was filed against an Order confirming a service tax demand for services rendered under six contracts. Three contracts were continuing contracts classified as "works contract" service under the Finance Act, 1994. The Senior Advocate argued that the demand was time-barred as the show cause notice was issued long after the prescribed period. The Senior Advocate relied on various decisions to support the contention that in cases like this, where the issue was previously addressed, the extended period of limitation cannot be invoked.

Eligibility for Benefit under Composition Scheme:
The appellant argued that for three new contracts, classified under "Works Contract" services, they had opted for the benefit under the Composition Scheme for Payment of Service Tax and paid tax accordingly. However, the Commissioner held that the appellant was not eligible for the benefit under the Composition Scheme due to undervaluation of taxable consideration and the nature of the contracts. The Senior Advocate contested this decision, citing relevant Circulars and legal provisions to support their argument.

Invocation of Extended Period of Limitation:
The Senior Advocate further argued that the demand was also barred by limitation as the show cause notice was issued beyond the prescribed limit. They contended that the demand was time-barred due to the department's knowledge of the appellant's tax payments and the settled interpretation of law regarding works contract service classification. The Tribunal found that the demand had been raised invoking the extended period, which was not permissible based on previous decisions and the settled classification of the appellant's services.

Operative Portion of the Order:
The Tribunal set aside the impugned order on the grounds that the appellant's activities fell within the works contract service category and were entitled to the benefit of the Works Contract Act. The demand was considered time-barred, and the appeal was allowed with consequential benefit. The Tribunal concluded that the appellant's services, along with the supply of materials, were rightly covered under the Works Contract Service, and the demand was time-barred.

This detailed analysis of the judgment covers the various issues involved in the case, including the classification of services under different contracts, eligibility for Composition Scheme benefits, invocation of extended period of limitation, and the final decision of the Tribunal setting aside the impugned order.