2020 (6) TMI 63 - AT - Service Tax

Tribunal Rules in Favor of Appellant, Service Tax Demands on Construction, Auxiliary, and Rental Services Deemed Unsustainable.

M/s. Ninan Jacob Associates Versus Commissioner Of Central Tax And Central Excise, Cochin

The Tribunal allowed the appeal, finding the demands for service tax on 'Commercial Construction Service', 'Business Auxiliary Service', and 'Renting of ... Classification of services - Business Auxiliary Services or not - renting of immovable property service - refund claim - works contract. Classification of services - Business Auxiliary Service or not - appellants have collected amounts from their clients for payment of statutory charges to Electricity Board, Municipal Corporation, etc., on behalf of the clients - HELD THAT:- In view of the decision of the apex court in case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT], no service has been rendered by the appellant to the clients of the appellants in relation to promotion of business or marketing of the goods - demand do not sustain. Renting of Immovable Property services - appellant submit that they have discharged service tax on the same and have produced the proof thereof, before the adjudicating authority - HELD THAT:- As the Service Tax stands paid, there are no reason to sustain the demand. Refund claim - works contract - HELD THAT:- The appellant has correctly paid service tax under the ‘Works Contract’ service, there would be no case for refund. All the demands raised, however, are not sustainable. Appeal allowed - decided in favor of appellant. Issues:Classification of services under 'Commercial Construction Service', 'Business Auxiliary Service', 'Renting of Immovable Property Service', and 'Architect Service' - Dispute over classification made by the appellant - Appellant's registration under Service Tax for 'Architect Service' and 'Works Contract' service - Appellant's argument based on composite contracts undertaken - Taxability of services rendered by the appellant - Collection of amounts for statutory charges - Demand on 'Renting of Immovable Property' services - Exclusion of amount for 'Architect' service - Refund of tax paid under 'Works Contract' service.Analysis:The appellants, registered under Service Tax for 'Architect Service' and 'Works Contract' service, disputed the classifications made by the Revenue, leading to a show-cause notice covering the period 2005-06 to 2009-2010. The appellant argued that their composite contracts undertaken prior to the registration as Works Contract Service provider should not be classified as 'Commercial Construction Service', citing a decision of the apex court. They contended that their services were in the nature of Works Contract service, not taxable before a certain date, and that they had rightly opted for a composition scheme post that date. The Tribunal found the demand on this count not sustainable.Regarding the collection of amounts for statutory charges on behalf of clients, the Revenue viewed it as 'Business Auxiliary Service'. However, the Tribunal, based on a decision of the apex court, held that no service had been rendered by the appellant in relation to the promotion of business or marketing of goods, leading to the rejection of the demand on this count.The appellant's submission on the demand for 'Renting of Immovable Property' services included proof of service tax payment and reliance on a Delhi High Court judgment. The Tribunal, considering the payment made and the legal position, found no reason to sustain the demand.A small demand related to the exclusion of an amount under the category of 'Architect' service was also discussed. The appellant argued for a refund if the tax paid could not be treated as payment under the 'Works Contract' service. However, the Tribunal, after a detailed analysis, found that the appellant had correctly paid service tax under the 'Works Contract' service, leading to the conclusion that all demands raised were not sustainable.The Authorized Representative for the department reiterated the findings of the Order-in-Original, but the Tribunal, based on its discussion and analysis, found them unacceptable. Consequently, the appeal was allowed, and the order was pronounced in Open Court on 29/05/2020.