Works contract classification defeats construction service tax demand; absence of wilful suppression also bars extended limitation.

Composite construction activity involving supply of material was treated as a works contract on the basis of the work order and certificate showing inclusive material cost and no material supplied by the recipient. Applying Larsen and Toubro, the service could not be taxed as Commercial or Industrial Construction Service, and the demand was unsustainable on that classification. The extended period of limitation was also held inapplicable because the record disclosed no specific allegation or finding of wilful suppression or intent to evade tax, and the services were said to have been rendered to entities not engaged in commerce, industry, or business. The service tax demand, penalties, and appellate order were set aside.

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Issues: (i) Whether the appellant's composite construction activity, involving supply of material, was classifiable as Works Contract and therefore not taxable under Commercial or Industrial Construction Service. (ii) Whether the extended period of limitation under the service tax law was invokable.

Issue (i): Whether the appellant's composite construction activity, involving supply of material, was classifiable as Works Contract and therefore not taxable under Commercial or Industrial Construction Service.

Analysis: The work order and certificate showed that the contract was inclusive of material cost and that no material was supplied by the recipient. On that basis, the activity was treated as a composite works contract. Applying the principle laid down in Larsen and Toubro, a service rendered along with material is not liable to be taxed under Commercial or Industrial Construction Service in the manner adopted in the impugned order.

Conclusion: The issue was decided in favour of the appellant. The demand could not be sustained under Commercial or Industrial Construction Service.

Issue (ii): Whether the extended period of limitation under the service tax law was invokable.

Analysis: No specific allegation of wilful suppression or intent to evade payment of tax was found on the record. The services were stated to have been rendered to organizations not engaged in commerce, industry, or business, which negatived the basis for invoking the extended limitation period.

Conclusion: The extended period of limitation was held not invokable, in favour of the appellant.

Final Conclusion: The service tax demand, penalties, and the impugned appellate order were set aside and the appeals were allowed with consequential relief as permissible in law.

Ratio Decidendi: A composite contract involving supply of material is to be treated as Works Contract, and a demand under Commercial or Industrial Construction Service cannot be sustained on that basis; the extended limitation period cannot be invoked in the absence of a specific allegation and finding of intent to evade tax.

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