Works contract treatment for painting activity led to remand for fresh service tax reconsideration.

Service tax demand on painting activity undertaken as part of authorised service station work was set aside and the matter remanded for fresh consideration because the later Supreme Court ruling on works contract treatment had not been applied. The tribunal found that the nature of the activity and the possible availability of exemption or valuation relief still required examination on the existing material, so the Commissioner (Appeals) had to decide the issue afresh in accordance with law.

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Issues: Whether the impugned order sustaining service tax demand on painting activity should be set aside and the matter remanded for fresh consideration in the light of the Supreme Court ruling on works contract.

Analysis: The dispute related to levy of service tax on painting work undertaken in the course of authorized service station activity. The relevant authority had not had the benefit of the later Supreme Court decision governing works contract treatment. Since the activity was claimed to be in the nature of a works contract and the applicability of exemption or valuation relief was still to be examined on the available material, the matter required reconsideration by the first appellate authority.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) for fresh decision in accordance with law.

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