2023 (7) TMI 1020 - AT - Service Tax

Scope of SCN - Change in classification by impugned order - SCN demand differs from impugned order - construction of residential complex services to Commercial or Industrial Construction Services - works contract service or not - renting of immovable property service - suppression of facts or not - extended period of limitation - HELD THAT - It is an admitted fact that the show cause notice has proposed the demand of Service Tax under construction of residential complex. However, in the impugned order the demand was confirmed under Commercial or Industrial Construction Service. Thus, the impugned order has travelled beyond the scope of show cause notice. The show cause notice cannot be rectified by way of Adjudication Order passed in such show cause notice, therefore, on this ground alone demand is not sustainable. Moreover, the period involved is 2005-06, even if it is assumed that the appellant had provided commercial or industrial construction service but undisputedly the service was provided along with material, therefore, it is falling under works contract Service - The levy of Service Tax on Works Contract was brought under the statute only with effect from 01.06.2007. 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 clearly held that if the nature of the services is of works contract, the same is not levy to service prior to 01.06.2007. Extended period of limitation - renting of immovable property service - HELD THAT - The levy of service Tax on renting of immovable property was not free from doubt, there were contrary judgments on this issue and finally the matter seized by the Hon ble Supreme Court. Therefore, the issue involved is of interpretation of the definition of renting of immovable property service. Moreover, the demand was raised on the basis of scrutiny of the documents of the appellant during the audit. This also shows that appellant have no intention to hide their transaction with intent to evade payment of Service Tax, therefore, in absence of any suppression of fact, fraud or collusion etc. the demand for the extended period cannot be sustained - this demand under renting of immovable property service is set aside on the ground of limitation. Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the classification of services under Commercial or Industrial Construction Services, the applicability of Service Tax on works contract services, and the demand under Renting of Immovable Property Services.

Commercial or Industrial Construction Services:
The impugned order confirmed a demand under Commercial or Industrial Construction Services, different from what was proposed in the show cause notice. The appellant argued that the classification cannot be changed from what was proposed in the notice. The tribunal agreed, stating that the impugned order exceeded the scope of the show cause notice. Additionally, the tribunal noted that even if the service provided fell under commercial or industrial construction, it was a works contract service, which was taxable only from 01.06.2007 onwards as per legal precedent.

Works Contract Services and Service Tax Applicability:
The appellant contended that the service provided was akin to works contract service, which became taxable from 01.06.2007. The tribunal referenced the Supreme Court's ruling in CCE Vs. L & T Ltd., emphasizing that works contract services were not subject to service tax before the specified date. Consequently, the demand for Service Tax for the period 2005-06 was deemed unsustainable by the tribunal.

Renting of Immovable Property Services:
Regarding the demand under Renting of Immovable Property Services, the appellant argued that there was no intention to evade payment as the demand was raised during an audit. The tribunal acknowledged the ambiguity surrounding the levy of service tax on renting of immovable property and noted that the matter was under scrutiny by the Supreme Court. Due to the absence of any evidence of suppression, fraud, or collusion, the demand under this service was set aside on the grounds of limitation.

Conclusion:
After considering the arguments and perusing the records, the tribunal modified the impugned order. It held that the demand under Commercial or Industrial Construction Services was unsustainable due to the discrepancy between the show cause notice and the order. The tribunal also ruled in favor of the appellant regarding the demand for Renting of Immovable Property Services, setting it aside based on the lack of intent to evade payment. As a result, the appeal was allowed, and the impugned order was modified accordingly.