2019 (2) TMI 475 - AT - Service Tax

Tribunal sets aside tax demands on ECIS and CICS, ruling in favor of department

Axis Engineers Versus CCCE & ST, Hyderabad - IV

The Tribunal allowed the appeal, setting aside the demands confirmed in the impugned order, including interest and penalties. The Tribunal held that the ... Commercial or Industrial Construction services - period September, 2004 to December, 2005 - Held that:- There being no dispute as to the fact that all the contracts were composite contracts for supply of materials and services, we hold that law laid down by the Apex Court in the case of Larsen & Toubro Ltd [2015 (8) TMI 749 - SUPREME COURT] would apply directly in the case in hand and accordingly, the demands confirmed under CICS are liable to be set aside - demand set aside. Erection, Commissioning and Installation services - demands have been raised on the ground that appellant herein has entered into contracts for erection of towers - Held that:- Similar issue came up before the Bench in the case of Neo Structo Construction Ltd [2010 (3) TMI 252 - CESTAT, AHMEDABAD] - After analysing the definition of Erection, Commissioning and Installation services, pre and post 01.05.2006, and also considering the Board’s Circular No. 334/4/2006-TRU dated 28.02.2006, the Bench held that erection of fabricated and prefabricated structure will be covered under the heading of ECIS only after 01.05.2006. The said ratio is directly applicable in the case in hand as the period involved in this case is prior to 01.05.2006. Accordingly, there cannot be any demand on the appellant under ECIS. The demands confirmed by the impugned order set aside - appeal allowed. Issues:1. Discharge of service tax liability under Erection, Commissioning and Installation Services (ECIS) and Commercial or Industrial Construction Services (CICS).2. Interpretation of the definition of ECIS and CICS.3. Applicability of abatement on billed value.4. Liability for service tax on erection of transmission towers.Analysis:Issue 1: The appellant claimed abatement of 67% on the gross amount billed and discharged service tax on 33% of the billed amount. The lower authorities contended that the appellant did not discharge service tax liability under ECIS and CICS. The appellant argued that the services were not taxable and the show cause notice was time-barred. The adjudicating authority dismissed the contentions and confirmed the demands along with penalties and interest.Issue 2: The Tribunal analyzed the demands raised under CICS for the period before 01.06.2007. Since all contracts were composite for supply of materials and services, following the law laid down by the Apex Court, the demands under CICS were set aside. Regarding demands under ECIS, the Tribunal referred to a previous case and held that erection of fabricated structures falls under ECIS only after 01.05.2006. As the period in this case was prior to that date, no demand could be made under ECIS.Issue 3: The appellant claimed abatement of 67% from the billed value, arguing that the tax liability did not arise in this case. However, the departmental representative contended that the appellant, by availing the abatement, was aware of the tax liability. The Tribunal found that the abatement might not be applicable to ECIS, thus supporting the department's position.Issue 4: The department argued that the appellant's contracts for erection of transmission towers fell under ECIS. The Tribunal agreed with this classification, noting that the lower authorities correctly confirmed the demands under ECIS. However, following the analysis for Issue 2, the demands under ECIS were set aside as well.In conclusion, the Tribunal allowed the appeal, setting aside the demands confirmed in the impugned order, including interest and penalties, based on the findings related to the interpretation of ECIS and CICS and the applicability of abatement on the billed value.