Appellant wins appeal against service tax liability; penalties dropped, contract ruled exempt.

The appellant challenged an order confirming duty demand and interest for alleged non-payment of service tax on works for government agencies. Penalties were initially imposed but later dropped. The appellant argued against penalty imposition, citing legal grounds and evidence. The Tribunal ruled in favor of the appellant, finding the works contract involved both supply and service, exempting them from service tax liability. Additional evidence submitted by the appellant was considered, leading to the Tribunal setting aside the original order and allowing the appeal with consequential relief.

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Issues:
- Duty demand confirmation along with interest
- Penalty imposition
- Applicability of service tax on works contract
- Additional evidence consideration by appellate authority

Duty Demand Confirmation along with Interest:
The appeal was against an order confirming duty demand and interest but setting aside penalties. The appellant was alleged to have undertaken works for government agencies without paying service tax under 'Erection, Commissioning and Installation Services'. The DGCEI calculated the service tax liability, which the appellant paid along with interest. A show-cause notice was issued demanding service tax, interest, and penalties. The original authority confirmed the demand and imposed penalties. The Commissioner rejected the appeal but dropped the penalties. The appellant challenged the order on grounds of law and evidence consideration.

Penalty Imposition:
The penalties under Sections 76, 77, and 78 of the Act were imposed by the original authority but were dropped by the Commissioner. The appellant sought to have the penalties dropped, arguing that the impugned order was unsustainable in law and failed to consider the evidence on record. The appellant contended that the issue was settled by the Hon'ble Apex Court and cited various decisions in support.

Applicability of Service Tax on Works Contract:
The appellant argued that the service tax demand was not sustainable as the works contract involved both supply and service, and service tax could not be levied on works contract for the period prior to 1st June 2007, as per the Hon'ble Apex Court's judgment. The appellant provided additional evidence, which the Commissioner did not consider. The Tribunal found that the work executed was a 'works contract' involving both supply and service, and the period in question was prior to 1st June 2007, making the appellant not liable to pay service tax.

Additional Evidence Consideration by Appellate Authority:
The appellant submitted additional evidence not considered by the Commissioner, citing the Hon'ble Apex Court's judgment and other decisions in support. The Commissioner had rejected the additional evidence on the grounds that it cannot be produced before the appellate authority. The Tribunal, after considering submissions from both parties and perusing the material on record, found in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.

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