Contractor liable for Service Tax on works & cleaning services, penalties imposed.

The appellant, a civil contractor, was found liable to pay Service Tax under 'works contract service' from 01.06.2007 and for cleaning activities provided from April 2005 to March 2009. The demand for Service Tax under 'construction service' and 'commercial or industrial construction service' up to 31.05.2007 was set aside. The Tribunal upheld the extended period of limitation and imposed penalties under Sections 77 and 78 of the Finance Act, 1994. The appeal was partly allowed, with the appellant required to pay Service Tax under specified categories, interest, and penalties.

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Issues Involved:
1. Taxability of services under different categories before and after 01.06.2007.
2. Liability to pay Service Tax for cleaning activities.
3. Justification for invoking the extended period of limitation and imposition of penalties.

Summary:

1. Taxability of Services:
The appellant, a civil contractor, was alleged to have provided construction services without registering or paying Service Tax from April 2005 to March 2009. The Joint Commissioner categorized the services under 'construction service' from April 2005, 'commercial or industrial construction service' from 16.06.2005, and 'works contract service' from 01.06.2007. The appellant argued that the services should only be taxed under 'works contract service' from 01.06.2007, citing that composite contracts cannot be split into different service categories before this date. The Tribunal referred to the Supreme Court's decision in M/s. Larsen & Toubro Ltd. and other relevant cases, concluding 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. Therefore, the demand for Service Tax under these categories up to 31.05.2007 was set aside. However, the appellant was held liable to pay Service Tax under 'works contract service' from 01.06.2007.

2. Liability for Cleaning Activities:
The Tribunal confirmed that the appellant was liable to pay Service Tax for cleaning activities provided during the period from April 2005 to March 2009.

3. Extended Period of Limitation and Penalties:
The Tribunal upheld the invocation of the extended period of limitation, noting that the appellant had not registered or paid Service Tax, and the non-payment was detected through investigation. Consequently, the appellant was held liable to pay penalties under Sections 77 and 78 of the Finance Act, 1994.

Conclusion:
The appeal was partly allowed. The demand for Service Tax under 'construction service' and 'commercial or industrial construction service' up to 31.05.2007 was set aside, but the appellant was liable to pay Service Tax under 'works contract service' from 01.06.2007 and for cleaning activities, along with applicable interest and penalties.

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