2019 (10) TMI 1108 - AT - Service Tax

Works Contract service - demand of service tax - execution of works contract for construction/repair, etc. of roads, distress bridges, non-commercial infrastructure, civil structures, government buildings, civic amenities of public interest by way of provision of labour/services and supply of goods in the execution of such contracts - period 2005-06 to 2008-09 - applicability of decision in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT . HELD THAT - The repair and maintenance, etc. of roads, Government buildings, etc. are retrospectively exempted by Finance Act, 2012 and therefore question of demanding tax thereon does not arise - Further, the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT has held that a Works Contract cannot be taxed under any other category of service like Erection, Commissioning or Installation Services. On the day of passing of the impugned Order the provision of Sec. 97 and sec. 98 were not in the statute book and the judgment of the Supreme Court in Larsen Toubro Ltd. was passed subsequently, hence, the Learned Commissioner did not have the benefit of examining the aforesaid contracts in the light of Sec. 97 and Sec. 98 and judgment of the Hon ble Supreme Court in the case of Larsen Toubro Ltd. Matter remanded back to the adjudicating authority for passing orders afresh in the light of Sec. 97 and Sec. 98 and the judgment of the Hon ble Supreme Court in the case of Larsen Toubro Ltd. - appeal allowed by way of remand.

Summary

Issues:
1. Demand of Service Tax and CENVAT Credit on works contract services provided by a state-owned PSU.
2. Applicability of Sec. 68 of the Finance Act, 1994 and Rule (2)(1) of the CENVAT Credit Rules, 2004.
3. Exemption under Sec. 97 and Sec. 98 of the Finance Act, 1994 for repair and maintenance services.
4. Interpretation of Works Contract taxation post judgments in relevant cases.
5. Consideration of subsequent retrospective amendments and judgments not available during original adjudication.

Analysis:
1. The case involves a state-owned PSU facing demands of Service Tax and CENVAT Credit amounting to significant sums for works contract services provided between 2005-2009. The appellant contests the taxation citing Supreme Court and Tribunal judgments.

2. The appellant argues that the works contracts executed by them cannot be taxed under a service contract simplicitor, referencing the Supreme Court judgment in CCE vs. Larsen & Toubro Ltd. The appellant also relies on other judgments and retrospective exemptions under Sec. 97 and Sec. 98 of the Finance Act, 1994.

3. The Tribunal acknowledges the retrospective exemptions under the Finance Act, 2012 for repair and maintenance services, rendering the tax demand baseless. Additionally, the Tribunal notes the Supreme Court's stance that Works Contracts cannot be taxed under other service categories.

4. Recognizing that the Ld. Commissioner did not have the benefit of subsequent judgments and amendments, the Tribunal decides to remand the matter for fresh adjudication. The Tribunal directs the adjudicating authority to consider Sec. 97, Sec. 98, and relevant judgments before passing new orders.

5. The Tribunal ensures the appellant's right to a fair hearing during the fresh adjudication process, emphasizing the importance of considering all relevant legal provisions and judicial precedents. The order is pronounced on October 22, 2019, signaling a fair and just approach to resolve the tax dispute.