Erection and installation services with materials classified as Works Contract Service under Section 67

The CESTAT Kolkata held that the appellant's activities of erection, commissioning and installation services with materials were correctly classified under Works Contract Service, not industrial commercial construction service. Following the Supreme Court decision in Commissioner, Central Excise Customs v. Larsen Toubro Ltd., the tribunal ruled that Section 67 of the Finance Act refers to gross amount charged for service provided, not the entire works contract amount. Since no demand was raised under Works Contract Service classification and no show-cause notice was issued under this category, the demand against the appellant was unsustainable. Appeal disposed off in favor of appellant.

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Issues involved:
The main issue in this case is the classification of services provided by the appellant under "Commercial or Industrial Construction Service" and "Erection, Commissioning and Installation Service" for the purpose of service tax liability.

Facts of the case:
The appellant, engaged in manufacturing machinery parts and providing taxable services, availed the benefit of Notification No.1/2006-ST to pay service tax on 33% of the gross value of contracts executed. However, the Revenue contended that the appellant was not entitled to claim this benefit as they were availing CENVAT credit on common input services at their Head Office.

Arguments presented:
The appellant argued that their activities should be classified as "Works Contract Service" based on a decision by the Hon'ble Apex Court. The Revenue maintained that the appellant was not entitled to the benefit of the Notification due to availing CENVAT credit on common input services.

Judgment:
After considering the arguments, the Tribunal found that the appellant's activities should indeed be classified as "Works Contract Service" and not under the categories of "Commercial or Industrial Construction Service" or "Erection, Commissioning and Installation Service". The Tribunal relied on the decision of the Hon'ble Apex Court and a previous Tribunal decision to support their conclusion.

Conclusion:
As a result, the Tribunal held that no demand was sustainable against the appellant since no show-cause notice had been issued to demand service tax under "Works Contract Service". The impugned orders were set aside, and the appeals were disposed of. It was also clarified that any service tax paid by the appellant during contract execution would not be refunded.

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