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Issues: (i) Whether service tax could be levied on an indivisible works contract and on the subcontractor for the period prior to 01.06.2007; (ii) Whether invocation of the extended period under Section 73 of the Finance Act, 1994 was justified for the later period and whether Section 73(2A) of the Finance Act, 1994 had any application.
Issue (i): Whether service tax could be levied on an indivisible works contract and on the subcontractor for the period prior to 01.06.2007.
Analysis: The levy of service tax on indivisible works contracts was held to be impermissible for the period before the 2007 amendment came into force on 01.06.2007. The liability could arise only from that date, and the earlier demand and consequential proceedings lacked legal sanction to that extent.
Conclusion: The demand for the period up to 31.05.2007 was held unsustainable and was set aside in favour of the assessee.
Issue (ii): Whether invocation of the extended period under Section 73 of the Finance Act, 1994 was justified for the later period and whether Section 73(2A) of the Finance Act, 1994 had any application.
Analysis: Section 73(1) of the Finance Act, 1994 was treated as governing the relevant period and was read as permitting action only within the prescribed time and upon the existence of the specified vitiating elements. Since no such grounds were found, the invocation of the provision was held to be unsustainable. Section 73(2A), introduced only with effect from 10.05.2013, was held inapplicable to the dispute period.
Conclusion: The extended-period demand for the period from 01.06.2007 to 31.03.2008 was held time-barred and unsustainable in favour of the assessee.
Final Conclusion: The questions of law were answered for the assessee, the tax demand and the merged adjudicatory orders were set aside, and the show-cause proceedings were discharged.
Ratio Decidendi: Service tax cannot be imposed on an indivisible works contract for the period before the law expressly enabled such levy, and invocation of the extended limitation period requires satisfaction of the statutory preconditions within the governing time limit.
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