Appellate Tribunal: No Service Tax on Pre-2007 Construction for Oil Companies The appellate tribunal concluded that service tax is not applicable on works contract activity for construction of retail outlets and ...
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Appellate Tribunal: No Service Tax on Pre-2007 Construction for Oil Companies
The appellate tribunal concluded that service tax is not applicable on works contract activity for construction of retail outlets and structures/electrification for oil companies executed before 01.06.2007. Following the Supreme Court decision in CCE & Cus, Kerala Vs Larsen & Toubro Ltd., which clarified that service tax is only applicable to service contracts, not composite works contracts, the tribunal allowed the appeal and set aside the order demanding service tax.
Issues: - Whether service tax is applicable on works contract activity for construction of retail outlets and erection of structures/electrification for oil companies during the period from 10.09.2004 to 25.07.2006.
Analysis: The appellant filed an appeal against Order-in-Appeal No. 36/2012 dated 11.07.2012, concerning the service tax demand on works contract activity for construction of retail outlets and structures/electrification for oil companies during the period from 10.09.2004 to 25.07.2006. The appellant was required to purchase materials and execute contracts as per the terms. The department issued a show cause notice for service tax on the works contract value, leading to the current appeal. The Hon'ble Supreme Court's decision in the case of CCE & Cus, Kerala Vs Larsen & Toubro Ltd. clarified that the taxable services referred to in the charging Section 65(105) pertain only to service contracts simpliciter and not composite works contracts. The value of a taxable service is the gross amount charged for the service rendered. The judgment emphasized that the taxation is on service contracts only, not on composite works contracts. As the works contract in this case was executed before 01.06.2007, the service tax cannot be demanded. Therefore, following the ratio laid down in the Supreme Court case, the appellate tribunal concluded that service tax is not leviable on the works contract executed prior to 01.06.2007, and consequently allowed the appeal filed by the appellant. The impugned order demanding service tax was set aside based on this analysis.
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