2017 (10) TMI 402 - AT - Service Tax

Service Tax Judgment: Repairs exempt, construction services remanded, subcontractor's liability confirmed

J.V. Kulkarni, Friends Associates Versus Commissioner of Central Excise, Nagpur

The judgment confirmed the demand for service tax on various services including repairs and maintenance, supply of tangible goods, goods transport agency, ... Repairs and Maintenance Service - recovery of service tax - Proviso to Section 73(1) of Finance Act 1994 - Section 97 of Finance Act, 1994 - supply of tangible goods service - goods transport agency service - site formation service - Construction of APMC market - construction of sports complex/stadium - Held that: - From reading of Section 97, it is clear that as per subsection (1) of Section 97, repair and maintenance of roads was not be levied with Service tax for the period 16-6-2005 to 26-7-2009 both days inclusive. As per this provisions, service tax under Repair and maintenance of roads is not payable for the aforesaid period therefore demand in respect of repair and maintenance of road for the period 16-6-2005 to 26-7-2009 is set aside and if any demand arises other than this period the same stand upheld - demand set aside. As regard the demand of ₹ 7,51,569/- on Supply of Tangible Goods Service, ₹ 9,92,218 in respect of Goods Transport Service, ₹ 1,54,249/- on Manpower Recruitment Service and 20,00,096/- on Site Formation Service provide to Reliance Infrastruture, Butibori, as per the submission of the appellant they have admitted the demand and they do not contest the same therefore confirmation of demand also stand upheld - demand upheld. Construction of APMC market - Held that: - the vital submission was not considered by the adjudicating authority, therefore matter related to this demand is remanded to the adjudicating authority for passing a fresh order - matter on remand. Construction of sports complex/stadium - Held that: - construction of sports complex/stadium is not for commercial activity therefore such activity does not fall under the definition of Commercial and Industrial Construction service - demand set aside. Site formation service - appellant have provided services to M/s. Indu Project - case of appellant is that they are sub contractor and main contractor has paid service tax therefore they are not liable to pay service tax - Held that: - in the Finance Act, 1994 there is no special treatment given to sub contractor or there is any exemption to sub contractor. Every person provides service is an independent service provider, his service cannot be forwarded by service recipient to subsequent service recipient that will not absolve appellant as sub contractor from service tax liability. There is clear relation of service provider and service recipient between appellant and M/s. Indu Project, for such service consideration received by the appellant, therefore they are liable to pay service tax - The appellant admittedly not declared any details about service tax liability on the construction service they have provided to the M/s. Indu Project, therefore there is clear suppression of facts. Accordingly, the service tax of ₹ 44,43,824/- is payable by the appellant, therefore this demand is upheld, interest and penalties imposed by the lower authority will be commensurate to the demand of service tax upheld - demand upheld. Decided partly in favor of appellant. Issues Involved:1. Confirmation of demand for various services under Service Tax Act.2. Applicability of Section 97 of the Finance Act, 1994 on repair and maintenance services for roads.3. Liability for service tax on supply of tangible goods services, goods transport agency services, manpower supply services, and site formation services.4. Taxability of construction services for APMC market and sports complex/stadium.5. Subcontractor's liability for service tax in relation to site formation services.6. Bar on demand due to conflicting views and time limitation.Issue 1: Confirmation of Demand for Various Services under Service Tax Act:The judgment confirmed the demand for service tax on different services provided, including repairs and maintenance, supply of tangible goods, goods transport agency, manpower supply, commercial or industrial construction, and site formation services. The total amount of service tax payable was detailed for each service, and the order included appropriation of previously paid amounts against the recoverable service tax.Issue 2: Applicability of Section 97 of the Finance Act, 1994 on Repair and Maintenance Services for Roads:Regarding the demand for repair and maintenance services for roads, the judgment referred to Section 97 of the Finance Act, 1994, which exempted service tax on such services for a specific period. It was established that service tax was not payable for repair and maintenance of roads during the mentioned period, leading to the setting aside of the demand for that period.Issue 3: Liability for Service Tax on Various Services:The appellant admitted the demand for supply of tangible goods services, goods transport agency services, manpower supply services, and site formation services provided to a specific entity. As the appellant did not contest these demands, the confirmation of the demand for these services was upheld.Issue 4: Taxability of Construction Services for APMC Market and Sports Complex/Stadium:Regarding the demand for construction services for an APMC market and a sports complex/stadium, the judgment highlighted arguments related to the charitable purpose of the projects and the nature of the construction activity. The matter concerning the APMC market was remanded for a fresh order due to vital submissions not considered earlier. However, the demand for construction of the sports complex/stadium was set aside based on established precedents.Issue 5: Subcontractor's Liability for Service Tax in Relation to Site Formation Services:The judgment addressed the subcontractor's liability for service tax concerning site formation services provided to a main contractor. It was emphasized that every service provider is independently liable for service tax, and being a subcontractor does not absolve one from this liability. The demand for site formation services was upheld based on the clear relationship between the appellant and the main contractor.Issue 6: Bar on Demand Due to Conflicting Views and Time Limitation:The appellant argued that conflicting views on service tax liability in a previous case barred the demand for a specific period. However, the judgment clarified that mere difference of opinion does not equate to a judgment of a Larger Bench. As the appellant failed to declare details of service tax liability, suppression of facts was noted, leading to the upheld demand for site formation services. The interest and penalties imposed were commensurate with the upheld service tax demands.In conclusion, the appeal was partly allowed based on the discussions and findings related to each issue presented before the tribunal.