2023 (10) TMI 354 - AT - Service Tax

Entitlement for abatement of 67% under notification No. 01/2006-ST dated 01.03.2006 - Thermal Insulation Services which included supply of various capital goods, which can be considered as plant /machinery /equipment and labour charges. Denial of benefit on the ground that as per explanation given in the exemption entry, the abatement is available only if the assessee supply the plant and machinery, equipment parts. HELD THAT - In the present case, there is no dispute that the appellant have provided insulation service along with insulation material to their service recipient. Considering the exactly same set of facts, this Tribunal decided the issue in the case of RUDRA ENGINEERING VERSUS C.C.E. S.T. -VADODARA-I 2023 (1) TMI 690 - CESTAT AHMEDABAD wherein the Tribunal has held it cannot be considered that the said entry is applicable only on the supply of plant, machinery or equipment or structures. Besides, it is also applicable on any other material soLearned In the present matter there is no dispute on the facts that the Appellant is Commissioning and Installation agency and for providing the taxable services appellant has provided the thermal insulating materials i.e. Hot insulation including supply of LRB and Aluminium Sheet, Cold insulation with Thermocol and Aluminium Sheet, Insulation of Pipeline with black superion sleeve providing and fixing of black superion with cellotape , insulation with black nitrile rubber foam, sheet, etc. and on supply of goods appellant also paid sales tax/ VAT. Hence, in our opinion, the Appellant are eligible to the benefit of the Notification No. 1/2006-S.T., dated 1-3-2006. The demand of Service Tax by denying the abatement notification No. 1/2006- ST is not sustainable - Appeal allowed.

Summary

Issues involved:
The judgment addresses the entitlement of abatement under notification No. 01/2006-ST for Thermal Insulation Services, and the classification of service under Works Contract Service.

Abatement entitlement under notification No. 01/2006-ST:
The appellant's entitlement for abatement of 67% under notification No. 01/2006-ST was questioned due to the alleged non-supply of plant/machinery/equipment and labour charges. The Tribunal considered the appellant's provision of Thermal Insulation Services along with the material used for insulation. Reference was made to a previous case where a similar abatement was allowed, leading to a decision in favor of the appellant.

Classification of service under Works Contract Service:
The Revenue contended that the appellant incorrectly classified the service as 'Works Contract' instead of 'installation of thermal insulation,' arguing that the conditions for Works Contract Service were not met. The Tribunal analyzed the definition of Works Contract Service introduced by the Finance Act, 2007, and found that the appellant's activities fell under the purview of 'works contract service' as they involved thermal insulation, for which VAT/sales tax was paid on goods used. Consequently, the impugned order demanding service tax was set aside.

Conclusion:
The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order. The judgment emphasized the importance of providing plant/machinery/equipment for abatement entitlement and clarified the classification of the appellant's service under Works Contract Service.