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2025 (1) TMI 1376 - AT - Service TaxClassification and tax liability of services - whether there is any liability to pay Service Tax by the appellant for the period prior to 01.07.2010 as well after or not and if they are liable to pay Service Tax then under which category their services would fall? - HELD THAT - The appellant have canvassed that the matter regarding non-leviability of Service Tax on CRCS or for that under WCS prior to 01.07.2010 is no longer res integra as it has been held in catena of judgments passed by the Tribunals that Service Tax is not leviable. Insofar as the issue of the activity being in the nature of WCS which is not covered by the scope of the circular he further submits that in terms of settled law now irrespective of whether the nature of construction service is simpliciter or in the nature of WCS no Service Tax is leviable on them for the period prior to 01.07.2010. Therefore the dropping of demand by the Adjudicating Authority for the period prior to 01.07.2010 is correct. For the period beyond 01.07.2010 their main argument is that since the Adjudicating Authority himself has confirmed the demand under different heading than what was proposed in the SCN the demand itself is not tenable on this ground alone. While the appellant is mainly adducing that demand is not sustainable on the ground that Adjudicating Authority has not confirmed the demand under proposed classification and on this sole ground the demand is liable to be set aside. It is found that in the facts of the case it is not tenable as Commissioner has classified in the impugned order as CRCS considering it as part of WCS and by holding that this is more specific and at no point of time he has held that there is no element of WCS in the said CRCS. In other words he has not held in the case of appellant that it was CRCS simpliciter rather he has held that it is CRCS which is very much in the nature of WCS. There is some merit in the departmental appeal as well as appellant s claim. However the best way would be to remand the matter to the Commissioner to decide the matter afresh for the demand for the period beyond 01.07.2010. While doing so he shall go by the admitted facts and evidence on record to decide whether there is any exclusion or exemption available for the said service (WCS/CRCS) in the given set of facts and evidence on record to arrive at the demand for the period beyond 01.07.2010. Conclusion - The classification of services post 01.07.2010 requires reevaluation by the Adjudicating Authority to determine the correct category and applicable tax liability. The Adjudicating Authority in the remand proceedings should examine proper classification i.e. WCS or CRCS in the facts of the case and whether any exemption or exclusion exist for not demanding Service Tax for the period beyond 01.07.2010. This appeal is allowed by way of remand.
The judgment involves the classification and tax liability of services provided by the appellant, M/s Aditya Construction Company India Pvt Ltd, under the categories of 'Construction of Complex Service' (CCS) and 'Works Contract Service' (WCS). The core issues revolve around the correct classification of services and the applicability of service tax for periods before and after 01.07.2010.
Issues Presented and Considered The Tribunal considered the following key issues:
Issue-wise Detailed Analysis 1. Liability to Pay Service Tax Prior to 01.07.2010 The relevant legal framework includes Circular No. 151/2/2012-ST which clarifies that no service tax is leviable on CRCS prior to 01.07.2010. The Tribunal noted that the appellant argued that the services were not liable to service tax under both CRCS and WCS categories for this period, citing precedents where tribunals held no tax was applicable. The Court found that the Adjudicating Authority correctly dropped the demand for this period, aligning with established legal interpretations that no service tax is applicable on construction services prior to 01.07.2010. 2. Classification of Services Post 01.07.2010 The appellant contested the classification of services under CRCS instead of WCS, arguing that the Adjudicating Authority had traversed beyond the SCN. The department, however, maintained that the services should be classified under WCS, which would not be exempt from service tax post 01.07.2010. The Tribunal noted that the Adjudicating Authority had examined the classification issue and concluded that CRCS is part of WCS. The Authority decided to classify the services under CRCS, considering it as a specific category within WCS, and thus liable to service tax post 01.07.2010. 3. Demand for Service Tax Post 01.07.2010 The appellant argued that the demand was unsustainable because it was confirmed under a different classification than proposed in the SCN. The Tribunal found that the Commissioner had not held the services as CRCS simpliciter but as part of WCS, and therefore, the classification was appropriate. The Tribunal acknowledged the merit in both the departmental appeal and the appellant's claim, indicating that the classification and tax liability needed further examination based on the facts and evidence. Significant Holdings The Tribunal decided to remand the matter for further examination of the classification and tax liability for services rendered post 01.07.2010. The Adjudicating Authority was instructed to determine the appropriate classification and assess any available exemptions or exclusions based on the evidence. Verbatim Quotes of Crucial Legal Reasoning: "...holding of service as CRCS in the facts of the case even for the period beyond 01.07.2010 does not suffer from any infirmity and for the period prior to 01.07.2010, it does not matter whether it is CRCS or WCS, as no Service Tax is leviable on any construction activity, as held in cited case laws." Core Principles Established
Final Determinations on Each Issue
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