Works contract classification and notice scope: demand failed when confirmed under a category not proposed in the show cause notice.

A demand cannot be sustained when it is confirmed under a service category different from the one proposed in the show cause notice; the Tribunal set aside the demand on that ground. Composite contracts involving both supply of goods and services were held classifiable only as Works Contract Services, and not as Construction of Residential Complex Services or Commercial or Industrial Construction Services; the demand under the wrong category therefore failed. The assessee was granted consequential reliefs.

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Issues: (i) whether confirmation of demand under a service category different from the one proposed in the show cause notice was sustainable; (ii) whether composite contracts involving supply of goods and services could be classified under Construction of Residential Complex Services instead of Works Contract Services.

Issue (i): whether confirmation of demand under a service category different from the one proposed in the show cause notice was sustainable.

Analysis: The show cause notices proposed demand under Works Contract Services, but the adjudicating authority confirmed the demand by classifying the activity under Construction of Residential Complex Services. A demand confirmed on a basis beyond the scope of the notice cannot be sustained.

Conclusion: The confirmation of demand on a different category from that proposed in the notice was not sustainable and was set aside.

Issue (ii): whether composite contracts involving supply of goods and services could be classified under Construction of Residential Complex Services instead of Works Contract Services.

Analysis: The contracts were composite in nature, involving both supply of materials and provision of services. The Tribunal applied its earlier view that such composite contracts do not fall under Construction of Residential Complex Services or Commercial or Industrial Construction Services and are classifiable only as Works Contract Services.

Conclusion: Composite contracts of this nature could not be taxed under Construction of Residential Complex Services and the demand under that category failed.

Final Conclusion: The impugned demand was set aside and the assessee succeeded with consequential reliefs.

Ratio Decidendi: A composite contract involving both goods and services is classifiable as works contract, and a demand cannot be sustained on a service category not proposed in the show cause notice.

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