2022 (4) TMI 878 - AT - Service Tax

Scope of SCN - demand has been raised in the category of Cleaning Services and Erection, Commissioning and Installation services which were never proposed in the SCN - no break-up of the tax amount demand has been provided in the impugned order - renovation of hospital under the category of Commercial or Industrial activity - Works Contract Service - Suppression of facts or not - extended period of limitation - HELD THAT - Nowhere in the entire Show Cause Notice (SCN), the demand of service was proposed in the category of Cleaning Services and Erection, Commissioning and Installation services. However, the demand has been confirmed under the category of Cleaning services as is evident from para 4.56 of the impugned order. Further the demand has also been raised in the category of Erection, Commissioning and Installation services - The Hon ble Supreme Court in the case of CCE VERSUS SHITAL INTERNATIONAL 2010 (10) TMI 19 - SUPREME COURT has held that the Revenue cannot be permitted to build up a new case which was not taken in the Show Cause Notice which is the foundation of the proceedings against the assessee. Therefore, the demand in the aforesaid categories cannot be sustained and thus, set aside. It is further found that vide specific exemption notification being Notification No.24/2009 dated 27.07.2009, introduced to exempt the activity of maintenance or repair of road retrospectively for the period from 16.06.2005 onwards, a fact that the Ld. Commissioner has completely ignored and therefore, the demand is liable to be set aside - the Ld. Commissioner has observed in para 4.9 of the OIO that since the assessee has not chosen to seek registration under the said category of works contract service, the services would be classifiable under other categories as per SCN even though the same is classifiable under Works Contract Service. In the case of PES ENGINEERS PVT. LTD VERSUS CCE ST, HYDERABAD-I AND (VICE-VERSA) 2017 (7) TMI 687 - CESTAT HYDERABAD the issue involved for demand pertaining to the period January 2005 to March 2012 under Erection Commissioning and Installation Service. The Tribunal has held that the services were classifiable under Works Contract Service and not Erection Commissioning and Installation Service , demand could not be sustained. Further, in the case of M/S. URC CONSTRUCTION (P) LTD. VERSUS COMMISSIONER OF CENTRAL, SALEM 2017 (1) TMI 1363 - CESTAT CHENNAI wherein there was an identical issue, amongst others, whether demand could be upheld for the period June 2007 to September 2008 under CICS, in case where the construction service rendered by the assessee also involved supply of materials and the classification of Works Contract Services was not proposed in the SCN for raising demand. The demand raised in the impugned order cannot be sustained and hence, set aside. In so far as the Revenue s appeal is concerned, even if the contention that the services for road were classifiable under Repair or Maintenance service, in that case also the same were wholly exempted vide Notification No.24/2009 dated 27.07.2009 retrospectively for the period from 16.06.2005 onwards. Hence, no demand can be sustained. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Confirmation of service tax demand under categories not proposed in the Show Cause Notice (SCN).
2. Classification of activities under the correct service tax categories.
3. Application of exemption notification for maintenance or repair of roads.
4. Classification of railway infrastructure improvement activities.
5. Classification of construction activities under Works Contract Service.
6. Applicability of extended period of limitation due to alleged fraud or suppression.

Detailed Analysis:

1. Confirmation of Service Tax Demand Under Categories Not Proposed in the SCN:
The appellant argued that the demand was raised under Cleaning Services and Erection, Commissioning, and Installation Services, which were not proposed in the SCN. The Tribunal found that the demand was confirmed under these categories without being mentioned in the SCN, violating the principle that the Revenue cannot build a new case not taken in the SCN. This was supported by the Supreme Court ruling in CCE vs. Shital International (2011) 1 SCC 109. Therefore, the demand under these categories was set aside.

2. Classification of Activities Under the Correct Service Tax Categories:
The appellant contended that the activities for repair and maintenance of roads were exempted retrospectively from 16.06.2005 onwards by Notification No. 24/2009 dated 27.07.2009. The Tribunal agreed, noting that the Ld. Commissioner ignored this exemption. The Tribunal also accepted that the improvement of infrastructure efficiency at railway level crossings should not be classified under maintenance or repair services but as construction services for railways, which were outside the service tax purview during the disputed period.

3. Application of Exemption Notification for Maintenance or Repair of Roads:
The Tribunal recognized that the specific exemption notification (Notification No. 24/2009) exempted maintenance or repair of roads retrospectively from 16.06.2005 onwards. Consequently, the demand related to these services was set aside.

4. Classification of Railway Infrastructure Improvement Activities:
The Tribunal agreed with the appellant that the activities for improving infrastructure efficiency at railway level crossings could not be classified under maintenance or repair services. Instead, these activities should be considered construction services for railways, which were not taxable under the definition of Commercial or Industrial Construction Service during the period in dispute.

5. Classification of Construction Activities Under Works Contract Service:
The appellant argued that the construction activities should be classified under Works Contract Service from 01.06.2007, a category not invoked in the SCN. The Tribunal referenced the Supreme Court decision in Larsen & Toubro (2015) 39 STR 913 (SC), which held that works contracts could not be taxed under other service categories like Commercial Construction Service or Erection, Commissioning, and Installation Service. The Tribunal found that the Ld. Commissioner's decision to classify the services under other categories due to the appellant not seeking registration under Works Contract Service was unsustainable. The Tribunal cited similar rulings in PES Engineers Pvt Ltd vs. CCE & ST, Hyderabad – II and URC Construction (P) Ltd vs. CCE, Salem, which supported the appellant's position.

6. Applicability of Extended Period of Limitation Due to Alleged Fraud or Suppression:
The appellant argued that there was no fraud or suppression, and thus the extended period of limitation should not apply. The Tribunal did not make a specific observation on this aspect as the appeal was decided on merits.

Conclusion:
The appeal filed by the assessee was allowed with consequential relief as per law, and the demand raised in the impugned order was set aside. The Department's appeal was dismissed as withdrawn under the litigation policy. Both appeals were disposed of accordingly.

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