2023 (8) TMI 317 - AT - Service Tax

Tribunal grants partial relief in service tax demand appeal, exempts specific entity services.

The Tribunal allowed the appeal, setting aside the demand for service tax on 67% of the gross value of works contract services provided by the appellant. ... Classification of service - Works Contract Service or not - works awarded for supplying material and providing of service - contention of the appellant is that the service tax in the nature of works contract service came into effect from 01.06.2007 - HELD THAT:- The appellant is providing their services along with material which is not in dispute. They merit classification for the said services is ‘works contract service’ as held by the Hon’ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] and the appellant is liable to pay service tax on 33% of the gross value of the contract which appellant is paying. The revenue wants to collect service tax on remaining 67% of the value of contract which his not sustainable in the eyes of law. Accordingly, the said demand is set aside. With regard to the service rendered by the appellant to Government College, Port, SEZ, Hospital and Public Utility Service – Water Supply are fully exempt from the service tax as per Circular No.80/10/2004-ST dated 17.09.2004. Therefore, for those services, the appellant is not liable to pay service at all. In these circumstances, the appellant is not liable to pay service tax as proposed in the show cause notice. The impugned order is set aside and appeal is allowed. Issues:The issues involved in the judgment are the classification of services provided by the appellant as works contract service, liability to pay service tax on the value of the contract, and exemption from service tax for services rendered to specific entities.Classification of Services:The appellant undertook works awarded by various entities and provided materials and services. The appellant initially registered as 'Interior Decorator' but later under 'construction services.' The appellant paid VAT on material and service tax on supply, not on exempted services. The appellant claimed abatement @ 67% for works contract services, citing the Apex Court's decision. The Tribunal found the services to be works contract services and upheld the appellant's liability to pay service tax on 33% of the gross value, setting aside the demand for tax on the remaining 67%.Exemption from Service Tax:Services provided to specific entities were exempt from service tax as per Circular No.80/10/2004-ST. The Tribunal held that for these exempted services, the appellant was not liable to pay any service tax. Consequently, the demand raised in the show cause notice was set aside, and the appellant was not required to pay service tax on these specific services.Conclusion:The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The stay petition was also disposed of, and the appellant was relieved from the proposed service tax liability, based on the classification of services as works contract service and the exemption from service tax for specific services.