Tribunal sets aside service tax demand, ruling in favor of appellant on composite works contracts.

The Tribunal ruled in favor of the appellant, setting aside the demand for service tax for the period 01.04.2006 to 30.06.2008. It held that both pre and post-01.06.2007 demands were not sustainable as the appellant's activities constituted composite works contracts falling under Works Contract Service, not under Commercial or Industrial Construction Service or Construction of Complex Service. The judgment emphasized the introduction of Works Contract Services from 01.06.2007 and clarified the applicability of service tax to composite contracts. The appeal was allowed with consequential reliefs granted to the appellant.

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Issues:
Demand of service tax for the period 01.04.2006 to 30.06.2008 under Construction of Residential Complex Service.

Analysis:
1. Issue of demand prior to 01.06.2007: The appellant argued that demand before 01.06.2007 cannot be sustained as their contracts were composite involving both materials and services. Citing the case of Commissioner of Central Excise vs. Larsen & Toubro Ltd., it was contended that composite contracts are not liable to service tax pre-01.06.2007. The Tribunal agreed and set aside the demand for this period.

2. Issue of demand after 01.06.2007: The demand post-01.06.2007 was made under Construction of Complex Service. The Tribunal referred to the case of M/s. Real Value Promoters Pvt. Ltd. and the judgment of Larsen & Toubro case to establish that post-01.06.2007, composite contracts attract service tax under Works Contract Services only. The Tribunal held that the appellant's activities remained composite works contracts even after 01.06.2007, falling under Works Contract Service, not under Commercial or Industrial Construction Service or Construction of Complex Service.

3. Legal Interpretation: The Tribunal analyzed the legal provisions and judgments, emphasizing that composite contracts were brought under service tax only from 01.06.2007 with the introduction of Works Contract Services. The Tribunal rejected the argument that Construction of Complex Service or Commercial or Industrial Construction Service should apply, stating that only service simpliciter without goods supply can fall under those categories.

4. Conclusion: The Tribunal ruled that the demand both pre and post-01.06.2007 could not be sustained and set it aside. The judgment highlighted the distinction between composite works contracts and service simpliciter, clarifying that the appellant's activities fell under Works Contract Service, not under other specified categories. The appeal was allowed with consequential reliefs, if any, in favor of the appellant.

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