2023 (9) TMI 1142 - AT - Service Tax

Non-payment of service tax - Business Auxiliary Service - Construction Service - Erection and Painting Service and Goods - Transport Agency Service - non-imposition of penalty under Section 76 of Finance Act - HELD THAT - The assessee is not disputing the liability towards Business Auxiliary Service, Construction Service GTA Service from 01.06.2007 onwards and the total demand of service tax for those services works out Rs.22,70,491/-. The said demand is confirmed against the assessee along with interest. If any amount is payable by the assesse, the same shall be adjusted as the assessee has already paid an amount of Rs.42,50,000/- during investigation and Rs.14,13,327/ after issuance of show-cause notice. The said amount is to be adjusted against the confirmed demand along with interest. Prior to the period 01.06.2007 as there is a composite contract wherein supply of materials is also involved, therefore, merits classification is works contract service, which was not in service tax net prior to 01.06.2007. Therefore, no service tax is payable by the assessee for the period prior to 01.06.2007 under the category of construction services, therefore, the said demand is set aside. The demand on account of business auxiliary service, GTA service and construction service w.e.f. 01.06.2007 onwards are confirmed along with interest and the amount already paid by the assessee are to be appropriated if any excess amount is paid, the same is to be refunded to the assessee within a period of 30 days from the date of receipt of this order - no penalty is imposable on the assessee. Appeal of Revenue dismissed.

Summary

Issues involved: Appeal against confirmation of demand for service tax, imposition of penalty under Section 78 of the Finance Act, 1994, and non-imposition of penalty under Section 76 of the Act.

Confirmation of Service Tax Demand:
The appellant, a service provider, was alleged to have not paid service tax for various services provided during 2004-2008. The appellant did not dispute the confirmation of service tax under Business Auxiliary Service and GTA service from June 1, 2007 onwards. However, for the period before June 1, 2007, the appellant argued that as they provided services along with materials, the demand for service tax is not sustainable. Citing a previous Supreme Court decision, the appellant contended that no service tax was payable for construction services prior to June 1, 2007, due to the nature of the contracts. The Tribunal agreed with the appellant, setting aside the demand for construction services before June 1, 2007.

Imposition of Penalty:
The Revenue contended that a penalty under Section 76 of the Act should be imposed on the appellant. However, the Tribunal held that in the circumstances of the case, no penalty was imposable on the appellant. The Tribunal found that the appellant had already paid a significant amount before the show-cause notice was issued, and considering the adjustments, no penalty was warranted.

Final Decision:
The Tribunal confirmed the demand for Business Auxiliary Service, GTA Service, and Construction Service from June 1, 2007 onwards, totaling Rs. 22,70,491. The amount already paid by the appellant was to be adjusted against this demand. For the period before June 1, 2007, no service tax was payable by the appellant on construction services. Consequently, the demand for that period was set aside. The Tribunal also ruled that no penalty was imposable on the appellant. The Revenue's appeal was dismissed, and the appellant's appeal was disposed of accordingly, with any excess amount to be refunded within 30 days.