2019 (3) TMI 814 - AT - Service Tax

Construction services - It appeared to Revenue that services provided by the service provider were in relation to construction where the construction was alongwith the material and service provider had paid sale tax on the said material - Held that - In the grounds of appeal Revenue has stated that similar projects were also executed by Municipalities. Therefore, we do not find any strength in the grounds raised by Revenue. We, therefore, uphold the impugned Order-in-Original in so far as it relates to setting aside the demand of service tax in respect of such construction work which were provided to various agencies as dealt with in the impugned proceedings - appeal of Revenue dismissed. Benefit of N/N. 01/2006 dated 01/03/2006 - work undertaken was with material and there was no transfer of property in goods involved - time limitation - Held that - During the period 2011-12 the service provider was liable to pay service tax of ₹ 97 lakhs. Whereas the confirmation of demand was for ₹ 43 lakhs and there is no information about service tax paid during the year 2011-12 therefore the contention of the learned counsel for service provider that the demand for the period from April, 2011 to June, 2012 is barred by limitation is worth consideration.

Summary

Issues involved:
1. Classification of services provided by the service provider under different categories for the period from 2011-12 to 2015-16.
2. Eligibility of the service provider to avail abatements and exemptions under relevant notifications.
3. Calculation of service tax liability and imposition of penalties by the Revenue.
4. Dispute regarding whether entities like GNIDA, UPRNNL, KDA, and IRCON International Ltd. should be considered governmental authorities for the purpose of availing exemptions.

Detailed Analysis:

1. The case involved the classification of services provided by the service provider, including 'Commercial or Industrial Construction Service,' 'Construction of Residential Complex Service,' and 'Works Contract Service.' The Revenue conducted a scrutiny of documents and observed discrepancies in the classification of services by the service provider for the period from October 2011 to June 2012 and from July 2012 to March 2016. The Revenue contended that the service provider should have paid service tax as per the Composition Scheme and that certain services were wrongly classified, leading to a demand for additional service tax.

2. The eligibility of the service provider to avail abatements and exemptions under Notification No.25/2012-ST was also a key issue. The Revenue argued that the service provider wrongly availed benefits under specific serial numbers of the notification, which were meant for services provided to governmental authorities. The dispute arose regarding whether entities like GNIDA, UPRNNL, KDA, and IRCON International Ltd. should be considered governmental authorities for the purpose of availing exemptions.

3. The calculation of service tax liability and imposition of penalties by the Revenue were challenged by both parties. The service provider contended that the demand was barred by limitation, as the period involved was from April 2011 to June 2012, and they were under a bona fide belief that services were exempted under relevant notifications. The Revenue, on the other hand, argued that the Original Authority correctly calculated the amount payable based on available evidence.

4. The dispute regarding the classification of entities like GNIDA, UPRNNL, KDA, and IRCON International Ltd. as governmental authorities was a significant issue in the appeal filed by the Revenue. The Revenue contended that these entities should not be considered governmental authorities as their projects were undertaken for commercial/business purposes and not as functions entrusted to Municipalities under the Constitution. The Tribunal upheld the impugned Order-in-Original, stating that the Revenue's grounds did not have merit, and rejected the appeal filed by the Revenue.

In conclusion, the Tribunal rejected the appeal filed by the Revenue in one case and allowed the appeal filed by the service provider in another case, based on the detailed analysis and arguments presented by both parties regarding the classification of services, eligibility for exemptions, calculation of service tax liability, and the status of entities as governmental authorities.