2024 (1) TMI 37 - AT - Service Tax

Tribunal Rules No Service Tax on Composite Works Contracts Before 01.06.2007, Upholds Commissioner's Order.

Commissioner of Customs, Central Excise-Panchkula Versus Kaushal Construction Companay

The Tribunal dismissed the Revenue's appeal, upholding the Commissioner's order that service tax could not be levied on composite works contracts under ... Waiver of demand under Commercial and Industrial Construction Service for the period prior to 01.06.2007 - works contract service - HELD THAT:- This issue is no more res integra and has been settled 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] wherein, the Hon’ble Apex Court has held that the composite indivisible works contracts involving goods and services is liable to service tax under ‘Works Contract Service’ only with effect from 01.06.2007. The decision of the Hon’ble Apex Court in the case of M/s Larsen & Toubro Ltd. cited has been upheld by the Hon’ble Apex court in the case of Total Environment Building System Pvt. Ltd. cited cited [2022 (8) TMI 168 - SUPREME COURT] wherein the Honble Apex Court has clearly held that the service tax cannot be levied on composite works Contracts prior to introduction of Finance Act, 2007 - It is not in dispute that the services rendered by the respondent to I.O.C.L falls under the category of Works Contract Service but the Revenue has sought to tax them under the category of Commercial or Industrial Construction Service as defined under Section 65(25b) of the Finance Act, 1994, even for the period prior to 01.06.2007 which cannot be done, in view of the law laid down by the Apex Court. There is no infirmity in the impugned order passed by the Ld. Commissioner and the appeal of the revenue has no force - Appeal of Revenue dismissed. Issues involved: The judgment involves the issue of demand of service tax under 'Commercial and Industrial Construction Service' for the period prior to 01.06.2007.Summary of Judgment:Issue 1: Demand of service tax under 'Commercial and Industrial Construction Service' for the period prior to 01.06.2007The appeal was against the order confirming the demand of service tax under section 73 of the Finance Act for an amount and penalties imposed by the Commissioner. The respondent was providing taxable services under 'Commercial or Industrial Construction Services' and 'Works Contract Services'. The investigation revealed non-payment of service tax by contractors engaged by a company. The show cause notice demanded service tax for the period 2006-07 to 2010-11. The Commissioner dropped the demand for Works Contract Service before 01.06.2007, leading to the Revenue's appeal.The Revenue argued that the order dropping the demand before 01.06.2007 was unsustainable, as the services were taxable from that date. They contended that the contracts were wrongly classified and should have been under Commercial and Industrial Construction Service. The respondent's services were deemed to be Works Contract Service, taxable from 01.06.2007, as per the law laid down by the Apex Court.The Consultant for the respondent argued that the services fell under Works Contract Service, citing judgments by the Apex Court. The Tribunal noted that the issue was settled by the Apex Court, which held that Works Contract Service was taxable only from 01.06.2007. The Tribunal upheld the Commissioner's order, stating that the service tax could not be levied on composite works contracts prior to the introduction of the Finance Act, 2007.In conclusion, the Tribunal found no infirmity in the Commissioner's order and dismissed the Revenue's appeal.This summary provides a detailed overview of the judgment, highlighting the key issues, arguments presented by both parties, and the Tribunal's decision based on legal precedents.