Tribunal overturns service tax demand, citing Supreme Court precedent. Revenue can recover with interest.

The Tribunal set aside the order confirming the service tax demand and penalties, allowing the Revenue to recover the collected amount with interest under Section 73A. Emphasizing the Supreme Court's ruling in Larsen & Toubro Ltd., no service tax could be imposed on composite works contracts before 1 June 2007. The appellant's liability was limited to depositing the collected service tax with the Central Government.

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Issues Involved:
1. Classification of services provided by the appellant.
2. Applicability of service tax on composite works contracts prior to 1 June 2007.
3. Collection and non-deposit of service tax by the appellant.
4. Legality of penalties and interest imposed.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Appellant:
The appellant was engaged in providing services for the installation of telecommunication towers, which included survey, design, planning, engineering, supply, installation, integration, testing, and commissioning of GSM equipment. The agreements with M/s. Nokia India Pvt. Ltd. and M/s. Ericsson India Pvt. Ltd. were examined, and it was found that the services provided were integral parts of Erection, Commissioning, or Installation Services.

2. Applicability of Service Tax on Composite Works Contracts Prior to 1 June 2007:
The Supreme Court in Larsen & Toubro Ltd. held that service tax could not be levied on composite indivisible works contracts before 1 June 2007. The appellant argued that their contracts were composite works contracts, and thus, no service tax liability should have arisen before 1 June 2007. The Tribunal agreed, stating that the contracts were indivisible works contracts, and in view of the Supreme Court's decision, no service tax could be imposed prior to 1 June 2007.

3. Collection and Non-Deposit of Service Tax by the Appellant:
The appellant collected service tax from M/s. Nokia India Pvt. Ltd. and M/s. Ericsson India Pvt. Ltd. but did not deposit it with the Government. The Tribunal noted that while the appellant could not be asked to discharge service tax liability due to the Supreme Court's ruling, they could not retain the collected service tax. Section 73A of the Finance Act, 1994, mandates that any collected amount representing service tax must be deposited with the Central Government.

4. Legality of Penalties and Interest Imposed:
The adjudicating authority imposed penalties and interest under various sections of the Finance Act, 1994. However, since the Tribunal held that no service tax could be levied on works contracts prior to 1 June 2007, the penalties and interest related to the service tax liability were set aside. The Tribunal allowed the Revenue to proceed under Section 73A to recover the collected amount with interest.

Conclusion:
The Tribunal set aside the impugned order dated 31 August 2012, which confirmed the demand of service tax and imposed penalties. The Revenue was granted liberty to proceed in accordance with Section 73A of the Finance Act to recover the collected service tax amount with interest. The appeal was allowed to the extent indicated, emphasizing that no service tax could be levied on composite works contracts prior to 1 June 2007, as per the Supreme Court's judgment in Larsen & Toubro Ltd.

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