2024 (10) TMI 1461 - AT - Service Tax

Interpretation of N/N. 01/2006-ST for availing abatement on services provided - Department has entertained a view that the service of the insulation provided by the appellant falls outside the preview of the eligibility criteria for the abatement as per Notification No. 01/2006-ST dated 01.03.2006 as amended - HELD THAT - The matter is no longer res Integra as the issue at hand has already been decided by the Tribunal in the similar circumstances in favour of the appellant. The relevant extract of the order in case of RUDRA ENGINEERING VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA-I 2024 (2) TMI 1450 - CESTAT AHMEDABAD has held that ' From the definition of Works Contract Service, it is clear that only specified categories of works contract are considered for levy of Service Tax under the said definition. These are enumerated in clauses (a) to (e). We find that in clause (a) thermal insulation also mentioned and in the present matter appellant had also paid VAT/ sales tax on goods which is used in installation of thermal insulation. We find that the impugned activity of the assessee was nothing but works contract service .' The facts of the present matter are similar to the matter decided by the Division Bench of this Tribunal - the impugned order in appeal without any merit and therefore the same is set aside - appeal allowed.

Summary

Issues: Interpretation of Notification No. 01/2006-ST for availing abatement on services provided; Classification of service under Works Contract Service.

Analysis:

Issue 1 - Interpretation of Notification No. 01/2006-ST:
The appellant, engaged in providing insulation services, availed the benefit of Notification No. 01/2006-ST dated 01.03.2006 for abatement of 67% of the taxable value. However, the department contended that the service provided did not meet the eligibility criteria for abatement as per the notification. The dispute centered around whether the appellant's activity fell within the scope of the notification, which required the supply of plant, machinery, or equipment for erection, commissioning, or installation. The Commissioner (Appeals) upheld the department's view, leading to the issuance of a show cause notice for service tax, interest, and penalties.

Issue 2 - Classification under Works Contract Service:
The appellant also faced a challenge regarding the classification of their service under Works Contract Service. The revenue argued that the appellant incorrectly classified the service as "installation of thermal insulation" under Works Contract Service, contending that the conditions for a works contract were not met. The Finance Act, 2007 introduced Works Contract Service, specifying categories of works contracts subject to service tax. The appellant's activity of providing thermal insulation was deemed to fall under works contract service, as thermal insulation was explicitly mentioned in the legislation.

Judicial Precedent and Decision:
The appellant cited a Tribunal decision in the case of M/s Rudra Engineering, where a similar issue was resolved in favor of the appellant. The Tribunal held that the appellant was entitled to the abatement as per the provisions of Notification No. 01/2006-ST. The Tribunal's decision in M/s. Rudra Engineering established a precedent, resolving the issue in favor of the appellant. Given the similarity of facts between the present case and the precedent, the Tribunal followed the earlier decision and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, citing the precedent set in M/s. Rudra Engineering. The appellant was deemed eligible for the abatement under Notification No. 01/2006-ST and the service was classified under Works Contract Service as per the relevant provisions. The decision highlighted the importance of legal interpretation and precedent in resolving disputes related to tax liabilities and service classifications.