2023 (10) TMI 9 - AT - Service Tax

Individual levy or works contract service - composite contracts - materials along with the services were rendered by the appellant to various clients during the relevant period 16/06/2005 to 31/05/2007 - rendering services like false ceiling, glazing etc. by supplying materials along with services as per the individual work orders issued by various clients - HELD THAT - To analyse in detail, it is necessary to remand the matter to the adjudicating authority to ascertain whether all contracts entered by the appellant with their clients are in the nature of works contract service or some contracts are only for supply of services. To ascertain the said position, the matter is remanded to the adjudicating authority. All issues are kept open. Needless to say that principles of natural justice be followed by affording opportunity of hearing to the appellant. The appeal is allowed by way remand.

Summary

Issues involved:
The appeal challenges the Order-in-Appeal No. 157/2010 passed by the Commissioner Of Central Excise(Appeals), Mangalore regarding the applicability of service tax for composite contracts involving materials and services rendered by the appellant from 16/06/2005 to 31/05/2007.

Summary:

Issue 1 - Applicability of service tax on works contract services:
The appellant, engaged in manufacturing and execution of various services, contested the levy of service tax on works contract services prior to 01/06/2007. The Chartered Accountant for the appellant argued that the services provided along with materials qualify as works contract services, citing the judgment of the Hon'ble Supreme Court in CCE, Kerala Vs. Larsen & Toubro Ltd. The Revenue, represented by the learned AR, supported the findings of the lower authorities.

Issue 2 - Determination of nature of contracts:
The Tribunal observed that the crux of the appeal revolves around the determination of the nature of contracts where materials and services were provided by the appellant to clients between 16/06/2005 to 31/05/2007. The authorities below upheld the demand for services and imposed penalties by dissecting the contracts. While acknowledging the relevance of the judgment in CCE, Kerala Vs. Larsen & Toubro Ltd., the Tribunal deemed it necessary to remand the matter to the adjudicating authority for a detailed analysis. The purpose of the remand is to ascertain whether all contracts are works contract services or some are solely for service supply. The Tribunal emphasized the importance of following principles of natural justice and granting the appellant an opportunity to be heard.

In conclusion, the Tribunal allowed the appeal by way of remand, keeping all issues open for further examination. The matter is to be reconsidered by the adjudicating authority to determine the nature of the contracts entered into by the appellant with their clients.