2024 (11) TMI 1223 - AT - Service Tax

Service tax under Commercial or Industrial Construction Service by invoking the extended period of limitation - HELD THAT - This issue is no more res integra and has been held by various benches of the Tribunal that if the service rendered by the assessee is works contract service , even then it cannot be taxed under any other category even after 01.06.2007. As decided in Bajrang Lal Gupra vs. CCE, Gurgaon 2023 (6) TMI 246 - CESTAT CHANDIGARH held composite contract or works contract service even after 01.06.2007 cannot be taxed under Construction of Complex Service under Section 65 (105) (zzh) read with Section 65 (30a) of the Finance Act, 1994 - The fact that there was no proposal in the show cause notice to include the income as auxiliary business service is indisputable in view of the contents of the show cause notice and therefore in the absence of any notice issued to the respondent in view of the provisions of Section 73, it is clear that imposition of tax and consequently interest and penalty cannot be sustained and the same has been rightly set aside by the Tribunal. As no order to treat the income as Business Auxiliary Service had been passed without proposing the same to the respondent in the show cause notice, the order passed by the Tribunal is justified and substantial question of law has to be answered against the revenue. Alsoin the case of Srishti Construction 2017 (12) TMI 172 - CESTAT CHANDIGARH the Division Bench of this Tribunal has also set-aside the demand of service tax under Works Contract Service and has also held that the extended period of limitation is not invokable and allowed the appeal of the appellant with consequential relief, if any, as per law.

Summary

Issues:
Appeal against rejection of service tax demand under 'Commercial or Industrial Construction Service'; Applicability of 'works contract service' for government undertaking contracts.

Analysis:
The appeal was filed against the rejection of the appellant's appeal by the Commissioner (Appeals) regarding the demand of service tax under 'Commercial or Industrial Construction Service.' The appellant, engaged in providing taxable services, had contracts with a government undertaking for construction, repairing, and up-gradation services. The issue revolved around whether the services provided fell under 'works contract service' as defined under the Finance Act, 1994. The appellant argued that the services rendered were composite in nature, involving both material transfer and service rendition, citing legal precedents such as the judgment in the case of Commr of CE vs. Larsen & Toubro Ltd. The Tribunal noted that the issue was settled in various cases, emphasizing that works contract services cannot be taxed under other categories even after a specific date.

The Tribunal considered the submissions from both parties and reviewed the relevant legal precedents cited by the appellant. It was observed that the issue had been consistently settled in previous cases, including the case of Bajrang Lal Gupta vs. CCE, where it was held that works contract services are taxable only from a certain date. The Tribunal referred to judgments from different benches, highlighting that composite works contracts could not be taxed under categories like 'Commercial or Industrial Construction Service' or 'Construction of Complex Service.' The Tribunal also referenced cases where demands for service tax under works contract services were set aside, emphasizing that the extended period of limitation was not applicable in such situations.

Ultimately, the Tribunal concluded that the impugned order was not sustainable in law and set it aside, allowing the appeal of the appellant with consequential relief, if any, as per the law. The decision was based on the consistent legal interpretation that works contract services have specific tax implications and cannot be treated as other taxable services, even after a certain legislative amendment date.