2018 (5) TMI 1062 - AT - Service Tax

Tribunal allows condonation of delay in tax appeal, emphasizes contract scrutiny for fair hearing

The Tribunal allowed condonation of delay in filing cross objections. The appeal by revenue against dropping Service Tax demand for DMRC activities was ... Classification of services - respondent is engaged in the work of providing/ laying/jointing/ replacement of water pipelines for Delhi Metro Rail Corporation (DMRC), Delhi Jal Borad (DJB) and other similar companies - Revenue have argued that the activity undertaken for DMRC is not exclusively pertaining to laying of pipeline and the said activity will fall within the definition of Erection Commission or Installation Service - whether the activity would be classified as Works Contract Service or as Erection Commission or Installation Service? Held that: - the relevant contracts executed by the respondent with DMRC will need to be scrutinized for taking a definitive view whether such activities will be liable to Service Tax under the category of Section 65 (39a) of the Act. Since the relevant agreements have not been produced for our perusal, we are left with no option but to remand the matter to the Adjudicating Authority for de novo decision after perusing the relevant contracts with DMRC. It is made clear that the dropping of Service Tax in respect of Delhi Jal Board has not been challenged by Revenue. Appeal allowed by way of remand. Issues:1. Condonation of delay in filing cross objections.2. Classification of activities for Delhi Metro Rail Corporation (DMRC) under Service Tax.3. Differentiation between activities for DMRC and Delhi Jal Board (DJB).4. Interpretation of Works Contract Service for tax liability.5. Requirement of scrutinizing relevant contracts for determining tax liability.6. Remanding the matter for de novo decision by the Adjudicating Authority.Analysis:1. The respondent filed for condonation of delay in filing cross objections, which was allowed by the Tribunal.2. The appeal was filed by the revenue against the dropping of Service Tax demand by the Adjudicating Authority for the period 2004-05 to 2009-10 and 2010-11 related to activities for DMRC. The revenue argued that activities for DMRC should be classified under Works Contract Service liable for Service Tax.3. The revenue contended that activities for DMRC were distinct from those for DJB and should be treated separately for tax assessment. The respondent, relying on legal precedents, argued that the activities were not liable for Service Tax.4. The Tribunal directed both parties to submit relevant contracts with DMRC for scrutiny to determine the correct nature of activities. As the contracts were not provided, the Tribunal remanded the matter to the Adjudicating Authority for a fresh decision after examining the contracts.5. The Tribunal set aside the impugned order only regarding the demand of Service Tax related to DMRC contracts, emphasizing the need for a new decision based on a thorough review of the contracts. The dropping of Service Tax for DJB activities was not challenged.6. The Tribunal allowed the admission of additional evidence as per the law and concluded by remanding the matter for further proceedings by the Adjudicating Authority with a fair hearing for the assessee.This judgment highlights the importance of proper classification of activities for tax liability, the necessity of providing relevant documents for scrutiny, and the procedural steps involved in remanding a matter for a fresh decision by the Adjudicating Authority.