2024 (12) TMI 740 - AT - Service Tax

Levy of service tax - Commercial or Industrial construction services - Supply of tangible goods services - Manpower Recruitment and Supply services - GTA services - appellant did not apply for inclusion of these services in his service tax registration - suppression of facts or not - extended period of limitation. Demand under Construction of Commercial or Industrial Building and Civil Structure - HELD THAT - Apart from contradictory stand of department in the show cause notice, treatment under the provisions of Income tax Act would not be relevant to determine taxability of services under the Finance Act, 1994, accordingly, demand of service tax on this count cannot be sustained. Demand of service tax under the category of Supply of Tangible Goods services - Demand of tax under the category of Goods Transport Agency (GTA) services - HELD THAT - Upon perusal of relevant facts from the available records, it is found that demand of tax under the category of supply of tangible goods service and GTA service pertains to transportation of goods carried out by the appellant by his own trucks and that appellant has neither collected any tax nor issued consignment notes; be so, the said activity is not taxable either prior to negative list regime or even after the same is specifically included under 66D (p) of the Finance Act, 1994 - entire approach in the show cause notice of determining taxability is incorrect; taxability could not have been determined based on inferences from how the income is treated under other statues or nomenclature of income shown in the balance sheet. There is no reliable material based on which it can be said that appellant has provided taxable services as claimed by the revenue. In that view, burden of proving provision of taxable service stands not discharged by revenue. Consequently, demand of tax on construction service, supply of tangible goods and GTA cannot be sustained. Demand of tax under the category of Manpower Recruitment and Supply Agency for supply of labour to Ms. Rati Engineering and supply of tangible goods services for Machinery - HELD THAT - Since, demand of service tax under the aforesaid categories and income is not tenable for the disputed period, consequently, appellant s claim of eligibility to threshold exemption in terms of notification no 8/2003 is correct. Extended period of limitation - HELD THAT - Since impugned order is not tenable on merits, no finding given on limitation. The impugned order is set aside - appeal allowed.

Summary

Issues:
- Whether the demand of service tax on the appellant is justified based on the services provided by them.
- Whether the appellant failed to discharge service tax liabilities for specific services.
- Whether the demand of service tax under various categories is sustainable.
- Whether the appellant is eligible for threshold exemption under notification no. 8/2003.

Analysis:

The appellant, a construction company, appealed against a demand for service tax raised by the Commissioner (Appeals) of CGST, Surat. The appellant contended that the services provided to government departments were exempt from service tax. The demand was based on inferences drawn from the balance sheets and other records maintained by the appellant. The adjudicating authority confirmed the tax demand, citing violations of various sections of the Finance Act, 1994. The Commissioner (Appeals) upheld the order, leading to the present appeal.

The appellant argued that the demand of service tax was based on inferences and that the income in question related to transportation services not covered under taxable categories. The Revenue reiterated the findings in the impugned order. The Tribunal carefully considered the submissions and records. It noted that while some income could be taxable under specific service categories, other inferences were not sustainable. The Tribunal found that the department's approach to determining taxability was incorrect, as it relied on inferences from how income was treated under other statutes. It concluded that the burden of proving taxable services was not discharged by the Revenue, leading to the dismissal of the tax demands under various categories.

Regarding the demand of service tax under the category of Manpower Recruitment and Supply Agency and Machinery rent income, the Tribunal found that since the demand was not tenable, the appellant's claim of eligibility for threshold exemption under notification no. 8/2003 was correct. As the impugned order was not tenable on merits, the Tribunal set it aside and allowed the appeal with consequential relief as per law.

In conclusion, the Tribunal found that the demand of service tax on the appellant was not justified based on the services provided, and the tax demands under various categories were not sustainable. The appellant was deemed eligible for the threshold exemption under notification no. 8/2003, leading to the setting aside of the impugned order and allowing the appeal.