Scaffolding services classified as Erection Installation Commissioning Service, not manpower supply, service tax cannot be demanded twice

The CESTAT Ahmedabad held that scaffolding erection and dismantling services provided by the appellant constitute Erection Installation Commissioning Service, not manpower supply service. Despite incorrect classification by the appellant who claimed 75% abatement, service tax was paid on the entire service - 25% by appellant and 75% by service recipient. The tribunal ruled service tax cannot be demanded twice on the same service regardless of who paid it. Additionally, services provided to SEZ units are exempt from service tax. The demand was also time-barred as no suppression of facts was established against the registered taxpayer filing regular returns. Appeals were allowed and demands set aside.

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Issues Involved:
1. Classification of the service provided by the appellant.
2. Eligibility for exemption from service tax under Manpower Recruitment & Supply Agency Service.
3. Double taxation on 75% of service charge.
4. Taxability of services provided to Reliance Industries Ltd. (SEZ) Jamnagar.
5. Service tax demand on differential value between the books of accounts and ST-3 return.

Summary:

1. Classification of Service:
The primary issue is whether the service provided by the appellant, i.e., Erection Installation of Scaffolding, falls under Manpower Recruitment & Supply Agency Service or Erection Installation and Commissioning Service. The Tribunal concluded that the service is not based on man-hours or the number of manpower but on the quantum of work, and the rate is per cubic meter of Scaffolding, Erection & Dismantling. Therefore, the service is classified under Erection Installation & Commissioning Service.

2. Eligibility for Exemption:
The appellant availed of a 75% abatement considering the service as Manpower Recruitment & Supply Agency Service and paid service tax on 25%. However, it was undisputed that the service recipient discharged the service tax on the remaining 75%. The Tribunal held that since the entire service tax was paid (25% by the appellant and 75% by the recipient), the department cannot demand service tax twice for the same service.

3. Double Taxation:
The Tribunal cited several judgments, including Dhariwal Industries Ltd. and Transpek Silox Industries Pvt. Ltd., to support that service tax cannot be demanded twice on the same service. The Tribunal concluded that demanding service tax from the appellant when the recipient has already paid it would amount to double taxation, which is impermissible.

4. Services to Reliance Industries Ltd. (SEZ) Jamnagar:
The service provided to Reliance Industries Ltd. (SEZ) Jamnagar was held to be non-taxable as per the SEZ Act, which exempts services provided to SEZ units from service tax. The Tribunal referenced the case of CCE Patna vs Advantage Media Consultant to support this conclusion.

5. Differential Value in Books of Accounts and ST-3 Return:
The appellant argued that the difference was due to a clerical error and not intentional suppression or fraud. The Tribunal found no suppression of facts since the appellant was a registered unit, regularly filing ST-3 returns and paying service tax on 25% of the service charges. Therefore, the demand for the remaining amount was set aside on the grounds of time bar.

Conclusion:
The Tribunal set aside the service tax demand on all counts, including classification under Erection Installation & Commissioning Service, non-taxability of services to SEZ, and the time-barred nature of the remaining demand. Appeals were allowed.

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