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of <h1>Tribunal Overturns Tax Order on Construction Services, Grants Appellants Fresh Opportunity</h1> The Tribunal set aside the Commissioner's order demanding service tax on construction services, amounting to &8377;53,70,906/- for 2004-2008, along ... Commercial or Industrial Construction Service/Construction of Complex Service/Works Contract Service - non payment of service tax - appellants claim that all the contracts executed by them are to be correctly classifiable as works contracts liable to service tax, if any, under tax entry “Works Contract Service” in terms of Section 65 (105) (zzzza) of FA, 1994 and such levy is tenable only w.e.f. 01/06/2007 - Held that: - it is clear the contracts under consideration are composite in nature involving supply of goods also. The said fact is apparently admitted by the lower Authority, who recorded that prior to 01/07/2007 (should be 01/06/2007) there was no exemption or concession granted for services classified as works contract. With that basis the demand was confirmed for the period prior to 01/06/2007 under other tax headings. Construction of independent houses for MPHB - taxability - Held that: - Existence of common facilities available to all residents of the locality or existence of common facilities in an approved lay out which is already in existence, wherein additional independent houses were built will not be covered in the scope of tax entry for construction of complex service. These aspects require re-examination - matter on remand. Various factual and legal issues have not been dealt with by the Original Authority before arriving at the decision in the impugned order - appeal allowed by way of remand for reexamination. Issues:1. Liability of service tax on construction services provided by the appellant.2. Classification of contracts as works contracts liable to service tax.3. Taxability of construction of independent houses for MPHB.4. Proper quantification of taxable value for contracts.5. Contestation on the ground of limitation and penalty imposition.Analysis:1. The appeal challenged the order of the Commissioner of Central Excise regarding the demand of service tax amounting to &8377; 53,70,906/- for the period 2004-2005 to 2007-2008 on construction services provided by the appellant under various categories. The Original Authority confirmed a service tax liability of &8377; 26,42,152/- along with penalties under Sections 77 and 78 of the Finance Act, 1994.2. The appellants argued that the contracts executed by them were composite in nature and should be classified as works contracts liable to service tax only from 01/06/2007 onwards based on the decision of the Hon'ble Supreme Court in CCE & CUS, Kerala vs. Larsen & Toubro Ltd. They contended that the contracts involved transfer of property in goods and were registered with the State VAT Authorities for tax purposes.3. Regarding the construction of independent houses for MPHB, the appellants claimed that these houses should not be taxed under construction of complex service as they are not part of a residential complex but individual units. The Tribunal found the reasoning of the Original Authority vague and directed a re-examination of the classification of these constructions and the tax liability associated with them.4. The appellants raised concerns about the proper quantification of taxable value for contracts, alleging errors in the calculation and claiming that certain amounts received as advance for the year 2004-2005 had already suffered service tax. The Original Authority was criticized for not considering sufficient documentary evidence in this regard.5. The proceedings were also contested on the grounds of limitation and the sustainability of penalties imposed on the appellant. The Tribunal observed that several factual and legal issues were not adequately addressed by the Original Authority in the impugned order. Consequently, the Tribunal set aside the order and remanded the case for a fresh decision, allowing the appellants an opportunity to present their case before the Original Authority.This detailed analysis of the judgment addresses the key issues raised in the appeal and the Tribunal's decision to remand the case for further consideration.
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