Composite works contract service tax demand failed for both pre- and post-01.06.2007 periods due to wrong classification.

A composite works contract involving both service and material was not exigible to service tax for the period before 01.06.2007, because works contract service became taxable only from that date. For the period after 01.06.2007, the demand also failed because the levy had been raised under the wrong taxable head, while the appellant had already paid service tax on the taxable portion after abatement. The Tribunal noted that the factual matrix was covered by its earlier decision in the appellant's own matter, and held the entire demand unsustainable.

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Issues: Whether the services rendered under a composite contract were liable to service tax for the period prior to 01.06.2007 and whether the demand for the period thereafter could be sustained when raised under the wrong head.

Analysis: The work was found to be a composite contract involving both service and material. In the light of the principle that works contract services became taxable only from 01.06.2007, the pre-01.06.2007 demand could not stand. For the period after 01.06.2007, the demand was held unsustainable because the services were correctly classifiable as works contract services and the levy had been raised under an incorrect head. The Tribunal also noted that the appellant had already paid service tax on the taxable portion after availing abatement and that the factual matrix was covered by the earlier decision in the appellant's own matter.

Conclusion: The demand for both the pre-01.06.2007 and post-01.06.2007 periods was held unsustainable, and relief was granted to the assessee.

Final Conclusion: The appeal succeeded in full and the service tax demand did not survive.

Ratio Decidendi: A composite works contract involving supply of material is not exigible to service tax for the period before the levy of works contract service, and a demand for the later period cannot be sustained if it is raised under an incorrect taxable head.

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