Works contract classification governed composite construction activity, making the service tax demand under construction categories unsustainable.

Construction activity involving both supply of services and transfer of property in goods was held to be a composite works contract service, not construction of residential complex service or commercial or industrial construction service. Applying the governing classification principle, the taxable entry adopted in the impugned order was incorrect because the activity could not be assessed under the wrong construction-related category. As a result, the service tax demand raised under that classification was not sustainable and the impugned order was set aside.

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Issues: Whether the appellant's construction activity was classifiable as works contract service instead of construction of residential complex service and commercial or industrial construction service, and whether the demand of service tax was sustainable.

Analysis: The appellant's activity involved both provision of construction services and transfer of property in goods. Applying the governing principle that such composite activity falls within works contract service, the classification adopted in the impugned order under construction-related taxable services was incorrect. Once the service was held to be works contract service, the demand raised under the wrong category could not be sustained.

Conclusion: The demand of service tax was not sustainable and the impugned order was set aside.

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