2023 (2) TMI 1044 - AT - Service Tax

Tribunal overturns demands and order, grants appeals with potential benefits.

The Tribunal set aside the demands and the impugned order, allowing the appeals with any consequential benefits as per law. - TMI Levy of service tax - various projects executed by the appellant under Construction of Residential Complex Service and Works Contract Service - miscellaneous income which was treated as receipts towards construction services - HELD THAT:- In the case of REYNOLDS PETRO CHEM LTD VERSUS C.C.E. & S.T. -SURAT-I [2022 (7) TMI 656 - CESTAT AHMEDABAD], the Learned Ahmedabad Bench has exhaustively dealt with the issue and has held that in the present matter for confirmation of service tax demand revenue also relied upon the TDS /26ASStatement. The said statement under provisions of Income Tax Act, 1961 is an Annual Consolidated tax statement. Income tax and service tax are two different/ separate and independent special Act and their provisions operate in two different fields. Therefore by relying the 26AS /TDS Statement under the Service Tax Act, demand of service tax cannot be made. The issue of Service Tax liability on the miscellaneous income is not justified - Appeal allowed. Issues Involved:1. Whether the demands confirmed in the impugned common order are correctRs.2. Levy of Service Tax on miscellaneous income treated as receipts towards construction services.Analysis:Issue 1:The appeals were filed against the Order-in-Original demanding Service Tax under Section 73(1) read with Section 73(2) of the Finance Act, 1994 for the period from April 2006 to September 2009. The main issue to be decided was whether the demands confirmed in the impugned order were correct. The appellant, a developer engaged in residential projects, entered into composite contracts with buyers. The Commissioner confirmed the demands proposed in the Show Cause Notices, leading to the appeals. The appellant argued that the issue was settled by the decision of the Hon'ble Apex Court and the Chennai Bench of the CESTAT in previous cases. The Chennai Bench's ruling established that service tax liability could not be demanded under specific categories for composite works contracts, both before and after June 1, 2007. The Tribunal accepted the submissions, holding in favor of the appellant.Issue 2:The second issue was the levy of Service Tax on miscellaneous income treated as receipts for construction services. The appellant argued that certain payments made towards land purchase were not consideration for services provided. Citing rulings from the Bangalore and Ahmedabad Benches of the CESTAT, the appellant contended that relying solely on TDS/26AS Statements under the Income Tax Act to impose Service Tax liability was not valid. The Ahmedabad Bench's ruling emphasized the distinction between income tax and service tax laws, stating that demands based on TDS statements were not justified. The Tribunal concurred with the appellant, setting aside the impugned order based on the settled legal position from various CESTAT rulings. The Revenue failed to distinguish the rulings relied upon by the appellant, leading to the Tribunal's decision to set aside the demand and impugned order.In conclusion, the Tribunal set aside the demands and the impugned order, allowing the appeals with any consequential benefits as per law.