Composite works contracts cannot be taxed as construction service; GTA levy depends on statutory indicia like a consignment note.

Composite works contract activities could not be taxed under Commercial & Industrial Construction Service for 2004-05 to 2008-09 because the work involved transfer of property in goods and was taxable, if at all, under the works contract category; that demand was set aside. Transportation charges were liable to Goods Transport Agency Service only where the record established the statutory elements of that service, including issuance of a consignment note; on the available record, the demand was confirmed to that extent. Penalties were not sustained in view of the mixed result and the facts recorded, and were set aside.

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Issues: (i) Whether the construction activities executed as works contracts could be taxed under Commercial & Industrial Construction Service for the period 2004-05 to 2008-09. (ii) Whether the transportation charges were liable to service tax under Goods Transport Agency Service. (iii) Whether penalties were sustainable.

Issue (i): Whether the construction activities executed as works contracts could be taxed under Commercial & Industrial Construction Service for the period 2004-05 to 2008-09.

Analysis: The demand under the construction head was examined in the light of the admitted nature of the activity as works contract. Once the activity involved transfer of property in goods and was a composite contract, it could not be taxed under the construction category merely because the demand had been proposed and confirmed under that head. The reasoning followed the settled position that such composite works are taxable under the works contract category and not under other construction heads.

Conclusion: The demand under Commercial & Industrial Construction Service was set aside, in favour of the assessee.

Issue (ii): Whether the transportation charges were liable to service tax under Goods Transport Agency Service.

Analysis: The transportation demand was tested against the essential requirement of Goods Transport Agency Service. In the absence of proper pleadings establishing that the service provider was a goods transport agency and where no consignment note was issued, the service could not be brought within that taxable category. The demand was therefore sustained only to the limited extent supported by the record before the lower authority.

Conclusion: The demand under Goods Transport Agency Service was confirmed, against the assessee.

Issue (iii): Whether penalties were sustainable.

Analysis: In view of the mixed result on the tax demands and the facts noticed in the order, the penalties were not sustained.

Conclusion: All penalties were set aside, in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent of setting aside the demand under the construction head and the penalties, while the transportation demand was maintained.

Ratio Decidendi: A composite works contract cannot be taxed under a construction service head merely by reclassification, and transportation is taxable as goods transport agency service only where the statutory indicia of that service, including issuance of a consignment note, are established.

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