2024 (9) TMI 617 - AT - Service Tax

Principles of natural justice - the adjudicating authority/ Commissioner (Appeals) has completely ignored the submissions made by the appellant before them and confirmed/upheld the huge demand - non-payment of service tax - Construction of Complex Service and Commercial or Industrial Construction Service - taxability of services provided by the appellants to education institutions and government departments - HELD THAT - It is found that some of the vital submissions made before this Tribunal but neither raised before the Adjudicating Authority/Commissioner (Appeals) nor considered by the said authorities. It is observed that the levy of Service Tax under the Construction must be based on the terms of the contract. Therefore, to arrive at a final conclusion of levy of service tax on the services in question the terms of the contract vis- -vis the judgments delivered which were relied upon by the appellant needs to be considered. However, the adjudicating authority has not properly examined the facts/terms of the contract and he has not seen the light of judgments given subsequently on the identical issue. Since the issue involved is mixed of facts and law it can be ascertained only after considering the condition therein of each case - the entire matter needs to be relooked and to be decided a fresh. The impugned order set aside - the appeals are allowed by way of remand to the adjudicating authority, for passing a fresh order.

Summary

Issues:
- Whether the appellants were providing taxable services under the categories of Construction of Complex Service and Commercial or Industrial Construction Service but not discharging service tax liability?
- Whether the services provided by the appellants to education institutions and government departments are taxable?
- Whether the construction of residential quarters for Gujarat State Police Housing Corporation Ltd is taxable?
- Whether the lower authorities correctly computed the tax liability and invoked the extended period of limitation?
- Whether the adjudicating authority and Commissioner (Appeals) violated the principle of natural justice?
- Whether the impugned orders demanding service tax and imposing penalties are sustainable?

Analysis:

The appellants were engaged in civil construction/repair works for various government authorities. The department initiated an inquiry alleging non-payment of service tax. The appellants were supplying materials and labor for the construction works. Show cause notices were issued, demands were confirmed, and penalties were proposed. The appellants contended that the services provided to education institutions and government departments were non-taxable as they were not for commercial or industrial purposes. They argued that the construction of residential quarters for the Gujarat State Police Housing Corporation Ltd was not taxable based on the principle of accretion.

The appellants challenged the computation of tax liability, claiming that the lower authorities did not consider the gross value correctly. They also argued against the invocation of the extended period of limitation, stating there was no suppression of facts to warrant penalties. The appellants further alleged that the adjudicating authority and Commissioner (Appeals) ignored their submissions, violating the principle of natural justice. They cited various judgments to support their arguments.

The Deputy Commissioner representing the Revenue reiterated the findings of the impugned orders. The Tribunal observed that crucial submissions were not considered by the lower authorities. They emphasized that the levy of service tax on construction services should be based on the terms of the contract and relevant judgments. The Tribunal concluded that the matter needed to be reexamined considering all aspects and judgments cited by the appellants. Consequently, the impugned orders were set aside, and the appeals were remanded to the adjudicating authority for fresh consideration, allowing the appellants the opportunity to defend their case.

In conclusion, the Tribunal remanded the case for a fresh decision, emphasizing the need to consider all aspects, terms of the contract, and relevant judgments. The appellants were granted the opportunity to present their case before the adjudicating authority.