Tribunal grants relief on service tax appeal, setting aside demand pre-2007, allowing composition scheme post-2007.

The Tribunal partially allowed the appeal, setting aside the demand for service tax before 1.6.2007 based on a Supreme Court judgment. For the period after 1.6.2007, the Tribunal recognized the classification issue and allowed the appellant to pay service tax under the composition scheme, setting aside penalties. The impugned order was modified accordingly, granting relief to the appellant.

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Issues:
1. Liability to pay service tax for the period 2006-07 and 2007-08.
2. Applicability of penalties under section 78 and section 77 of the Finance Act.
3. Interpretation of whether the activity falls under works contract service or 'Commercial or Industrial Construction Service'.
4. Request for the appellant to pay service tax under the composition scheme.

Analysis:
1. The appellant had provided 'Commercial or Industrial Construction Service' to BSNL for the period 2006-07 and 2007-08 without discharging service tax. The original authority confirmed the demand of service tax, interest, and penalties. The Commissioner (Appeals) upheld the decision, leading to this appeal.

2. The appellant argued that the period before 1.6.2007 should not be subject to service tax based on the Supreme Court's judgment in Larsen & Toubro Ltd. v. State of Karnataka. The Tribunal agreed and set aside the demand for this period.

3. For the period after 1.6.2007, the appellant contended that the activity should be classified as works contract service, not 'Commercial or Industrial Construction Service'. The Tribunal acknowledged the interpretational issue and set aside the penalties imposed, allowing the appellant to pay the service tax under the composition scheme as per the Service Tax Rules 2007.

4. Consequently, the Tribunal modified the impugned order, setting aside the demand before 1.6.2007, penalties after 1.6.2007, and directing the department to permit the appellant to pay service tax for the latter period under the composition scheme. The appeal was partly allowed with the mentioned relief.

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