2021 (12) TMI 429 - AT - Service Tax

Classification of services - construction services rendered by the appellant are involving both supply of material as well as rendering of service - Commercial or Industrial Construction Services - period 2008-09 to 2010-11 - time limitation - HELD THAT - In the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI similar issue was analysed wherein the Tribunal held that after 01.06.2007 for services rendered in the nature of composite indivisible contracts, the levy of service tax has to be under Works Contract Service under Section 65 (105) (zzzza) - the demand of service tax under Commercial or Industrial Construction Services cannot sustain for contracts which are composite in nature and involve both supply of material and rendering of service. Time Limitation - HELD THAT - The department has not put forward any evidence to establish any positive act of willful suppression or mis-statement against the appellant. Further, the issue is interpretational in nature, and was under litigation during the disputed period. The question as to whether service tax is leviable on Work Contract Services was under litigation and travelled up to Supreme Court which was settled by the decision rendered in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT . For these reasons, the appellant has made out a case on the ground of limitation also. The demand of service tax cannot sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax under Commercial or Industrial Construction Services for composite contracts involving both supply of material and rendering of service.
Limitation period for issuing show cause notice and applicability of willful suppression or mis-statement.

Analysis:
Issue 1: Demand of service tax under Commercial or Industrial Construction Services for composite contracts
The appellants were engaged in providing construction services and were issued a Show Cause Notice proposing demand for Service Tax for the period 2008-09 to 2010-11 for construction services rendered to a specific entity. The appellant argued that the construction services provided were composite contracts involving both supply of materials and rendering of services. They contended that the demand under Commercial or Industrial Construction Services was not sustainable as it did not consider the nature of the works contract service provided. The Counsel relied on previous Tribunal decisions to support their argument, emphasizing that demands under different categories could not be sustained. The Tribunal analyzed the issue and referred to relevant case laws to conclude that the demand of service tax under Commercial or Industrial Construction Services cannot sustain for composite contracts involving both supply of material and rendering of service. The Tribunal set aside the impugned order, allowing the appeal with consequential relief.

Issue 2: Limitation period for issuing show cause notice and applicability of willful suppression or mis-statement
The Counsel also argued on the aspect of limitation, stating that the show-cause notice was issued for a specific period without any evidence of willful suppression or mis-statement by the appellant. They highlighted that the issue regarding the levy of service tax on Work Contract Services was interpretational and under litigation during the disputed period. The Counsel referenced a Supreme Court decision to support their argument. The Tribunal considered these arguments and found that the appellant had made a case on the ground of limitation as well. Consequently, the demand of service tax was held unsustainable, and the impugned order was set aside, allowing the appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the demand of service tax under Commercial or Industrial Construction Services for composite contracts involving both supply of material and rendering of service could not sustain. Additionally, the Tribunal accepted the argument regarding the limitation period for issuing the show cause notice and the absence of willful suppression or mis-statement by the appellant. The appeal was allowed with consequential relief, emphasizing the importance of considering the nature of the services provided in determining the tax liability.