2024 (3) TMI 230 - AT - Service Tax

CENVAT Credit - common input services used for taxable as well as exempt services - appellant was discharging their service tax liability by availing the benefit of Notification No.1/2006-ST dated 01.03.2006 - industrial commercial construction service - erection, commissioning and installation service - HELD THAT - It is not in dispute by the Revenue that the appellant has taken the activities of erection, commissioning and installation services along with materials. Therefore, the merits classification of the above services under Works Contract Service and no demand is raised against the appellant under Works Contract Service prior to 01.06.2007. Therefore, following the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , wherein the Hon ble Apex Court has observed Section 67 of the Finance Act, which speaks of gross amount charged , only speaks of the gross amount charged for service provided and not the gross amount of the works contract as a whole from which various deductions have to be made to arrive at the service element in the said contract. Therefore, no demand is sustainable against the appellant as the demand has not been raised under Works Contract Service - the merits classification of the activity undertaken by the appellant falls under the category of Works Contract Service . Therefore, no demand is sustainable against the appellant as no show-cause notice has been issued to demand service tax from the appellant under Works Contract Service . Appeal disposed off.

Summary

Issues involved:
The main issue in this case is the classification of services provided by the appellant under "Commercial or Industrial Construction Service" and "Erection, Commissioning and Installation Service" for the purpose of service tax liability.

Facts of the case:
The appellant, engaged in manufacturing machinery parts and providing taxable services, availed the benefit of Notification No.1/2006-ST to pay service tax on 33% of the gross value of contracts executed. However, the Revenue contended that the appellant was not entitled to claim this benefit as they were availing CENVAT credit on common input services at their Head Office.

Arguments presented:
The appellant argued that their activities should be classified as "Works Contract Service" based on a decision by the Hon'ble Apex Court. The Revenue maintained that the appellant was not entitled to the benefit of the Notification due to availing CENVAT credit on common input services.

Judgment:
After considering the arguments, the Tribunal found that the appellant's activities should indeed be classified as "Works Contract Service" and not under the categories of "Commercial or Industrial Construction Service" or "Erection, Commissioning and Installation Service". The Tribunal relied on the decision of the Hon'ble Apex Court and a previous Tribunal decision to support their conclusion.

Conclusion:
As a result, the Tribunal held that no demand was sustainable against the appellant since no show-cause notice had been issued to demand service tax under "Works Contract Service". The impugned orders were set aside, and the appeals were disposed of. It was also clarified that any service tax paid by the appellant during contract execution would not be refunded.