Tribunal rules on Service Tax appeal, upholding demand for works contract service and penalties.

The Tribunal partly allowed the appeal by setting aside the Service Tax demand for the period up to 31.05.2007 under 'construction service' and 'commercial or industrial construction service.' However, it upheld the demand under 'works contract service' from 01.06.2007 onwards and for cleaning activity. Penalties under Sections 77 and 78 of the Finance Act, 1994, were also upheld, including a penalty of Rs.5,000/- and an amount equivalent to the Service Tax payable.

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Issues Involved:
1. Taxability of services rendered under construction service, commercial or industrial construction service, and works contract service.
2. Liability to pay Service Tax for cleaning activity.
3. Justification for invocation of extended period of limitation and imposition of penalties.

Summary of Judgment:

1. Taxability of Services Rendered:
The appellant, a civil contractor, was alleged to have provided services such as construction of office buildings, erection of cell phone towers, and other civil structures without paying Service Tax from October 2004 to March 2009. The Joint Commissioner classified these services under 'construction service' from 10.09.2004, 'commercial or industrial construction service' from 16.06.2005, and 'works contract service' from 01.06.2007, confirming the Service Tax demands and penalties. The Tribunal referred to the Supreme Court ruling in M/s. Larsen & Toubro Ltd., which held that composite contracts involving transfer of property in goods could not be taxed under 'construction service' or 'commercial or industrial construction service' before 01.06.2007. Consequently, the Tribunal set aside the Service Tax demand for the period up to 31.05.2007 but upheld the demand under 'works contract service' from 01.06.2007 onwards.

2. Liability to Pay Service Tax for Cleaning Activity:
The appellant was also alleged to have provided cleaning services from 2005-06 to 2008-09 without paying Service Tax. The Tribunal upheld the demand of Rs.14,531/- for the cleaning activity as it was not disputed by the appellant.

3. Justification for Invocation of Extended Period of Limitation and Imposition of Penalties:
The appellant had taken registration in 2004 but did not pay Service Tax or file returns for the services rendered. The Anti-evasion Unit detected this non-compliance, justifying the invocation of the extended period of limitation. The Tribunal upheld the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, including a penalty of Rs.5,000/- and an amount equivalent to the Service Tax payable for works contract service and cleaning activity.

Conclusion:
The Tribunal modified the impugned order by setting aside the Service Tax demand for the period up to 31.05.2007 under 'construction service' and 'commercial or industrial construction service.' However, it upheld the demand under 'works contract service' from 01.06.2007 and the cleaning activity, along with applicable interest and penalties. The appeal was partly allowed.

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