Tribunal upholds service tax liability on construction contract with minor adjustment

The Tribunal dismissed the Revenue's appeal against the Commissioner of Service Tax's Order-in-Original regarding service tax liability on a construction contract with the West Bengal State Electricity Board. The contract was deemed a "Works Contract" under Section 65(105)(zzzza) of the Finance Act, 1994, subject to service tax from June 2007. The demand for service tax was recalculated, with a minor portion upheld for the period from June 2007 to March 2008. The Tribunal found the appeal not maintainable under the Litigation Policy, upholding the Commissioner's order.

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Issues:
- Appeal filed by Revenue against Order-in-Original dated 15.06.2009 passed by Commissioner of Service Tax, Kolkata.
- Determination of service tax liability on a contract for construction work.
- Interpretation of the definition of "Works Contract" under Section 65(105)(zzzza) of the Finance Act, 1994.
- Applicability of service tax on the contract with West Bengal State Electricity Board.

Analysis:
The case involved an appeal by the Revenue against the Order-in-Original dated 15.06.2009 passed by the Commissioner of Service Tax, Kolkata. The dispute revolved around the service tax liability on a contract for construction work undertaken by M/s Taisei Corporation for the West Bengal State Electricity Board. The appellant claimed exemption from service tax based on the exclusion of certain items of the contract under Section 65(25b) of the Finance Act, 1994.

Upon hearing arguments from the Department's Special Counsel, it was noted that the contract with the West Bengal State Electricity Board constituted a "Works Contract" as defined under Section 65(105)(zzzza) of the Finance Act, 1994. The Tribunal observed that the contract fell under the purview of service tax as a "Works Contract" effective from 1st June 2007, as per the decision in the case of CCE Vs. Larsen & Toubro Ltd. The demand for service tax was recalculated, with only a minor portion surviving for the period from June 2007 to March 2008.

The Tribunal further analyzed the demand amounting to Rs. 4,39,181, which was deemed to fall under the Litigation Policy. Consequently, the appeal filed by the Department was considered not maintainable under the Litigation Policy. As a result, the Tribunal dismissed the appeal by the Department and upheld the impugned order passed by the Commissioner of Service Tax, Kolkata.

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