2024 (10) TMI 151 - AT - Service Tax

Service tax demand on construction services remanded for proving material usage under Notification 01/2006-S.T benefit eligibility

M/s. N.K. Constructions Versus Commissioner of Central Excise and Service Tax, Guwahati

CESTAT Kolkata remanded the matter regarding commercial or industrial construction service tax demand, allowing the appellant to prove material usage for ... Demand under the head Commercial or industrial construction service - Eligibility for the benefit of N/N. 01/2006-S.T dated 01.03.2006 - usage of materials - claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006 - Extended period of Limitation - Demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service'. Demand under the head Commercial or industrial construction service - Eligibility for the benefit of N/N. 01/2006-S.T dated 01.03.2006 - usage of materials - claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006 - HELD THAT:- It is the submission of the Appellant that they have evidence on record to show that they have used 'materials' while executing all the Work Orders. It is their submission that if the issue is remanded back to the adjudicating authority, they will be able to prove the usage of 'materials' in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended). The demands confirmed in the impugned order under the category of 'Commercial or industrial construction service’ is set aside and the matter remanded back to the adjudicating authority for the purpose of verification of usage of materials in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended) and examine the eligibility of the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 in respect of those Work Orders as well. The appellant is directed to produce all the documents evidencing that materials have been used in the said Work Orders. Extended period of Limitation - HELD THAT:- The appellant has not collected Service Tax from its customers. Further, the appellant was of the view that they were eligible for the benefit of exemption under Notification No. 01/2006-S.T. as they were using materials. Thus, suppression of facts with intention to evade the tax has not been established in this case. The demand of Service Tax from the appellant by invoking the extended period of limitation is not sustainable - The demand in the instant case has been raised for the period from 01.10.2007 to 30.09.2012 while the impugned Show Cause Notice was issued on 12.04.2013. Accordingly, the demand is to be restricted to the normal period of limitation and the verification by the adjudicating authority, is also to be restricted to the normal period of limitation alone. Demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service' - HELD THAT:- The appellant has not contested the demands of service tax on these categories. Accordingly, the demands of service tax along with interest confirmed under these categories upheld. Since there is no evidence brought on record to establish suppression of facts with intention to evade payment of tax in respect of these demands, no penalty imposable on the appellant with respect to these confirmed demands. Appeal disposed off. Issues:1. Demand of Service Tax under 'commercial or industrial construction service' category.2. Benefit of Notification No. 01/2006-S.T. dated 01.03.2006 denied for certain Work Orders.3. Demand of service tax under 'Technical Testing and Analysis service' and 'Consulting Engineer Service'.4. Invocation of extended period of limitation for demanding Service Tax.5. Imposition of penalties under Section 78 and Section 77 of the Finance Act, 1994.Analysis:Issue 1: Demand of Service Tax under 'commercial or industrial construction service' categoryThe appellant, engaged in construction works, was issued a Show Cause Notice demanding Service Tax for a specific period. The Ld. Commissioner confirmed the demand, including penalties, which led to the appellant filing an appeal against the decision. The appellant argued that all construction works were carried out along with materials, making them eligible for the benefit of Notification No. 01/2006-S.T. The Tribunal observed discrepancies in the adjudication and remanded the matter back to verify the usage of materials in all Work Orders where the benefit of the Notification was denied.Issue 2: Benefit of Notification No. 01/2006-S.T. dated 01.03.2006 denied for certain Work OrdersThe adjudicating authority allowed the benefit of the Notification for some Work Orders but rejected it for others. The appellant contended that materials were used in all contracts, providing evidence to support their claim. The Tribunal set aside the demands under this category and directed the adjudicating authority to examine the eligibility of the Notification for all remaining Work Orders where the benefit was not extended.Issue 3: Demand of service tax under 'Technical Testing and Analysis service' and 'Consulting Engineer Service'The appellant did not contest the demand of service tax under these categories but sought to set aside the imposed penalties. The Tribunal upheld the demands of service tax but ruled that no penalty was imposable due to the lack of evidence establishing an intention to evade tax.Issue 4: Invocation of extended period of limitation for demanding Service TaxThe Tribunal found that the appellant had not collected Service Tax from customers and believed they were eligible for an exemption due to material usage. As suppression of facts to evade tax was not proven, the demand under the extended period was deemed unsustainable, restricting the verification to the normal limitation period.Issue 5: Imposition of penalties under Section 78 and Section 77 of the Finance Act, 1994The Tribunal held that no penalty was imposable on the appellant concerning the demands for 'Technical Testing and Analysis service' and 'Consulting Engineer Service' due to the absence of evidence indicating an intention to evade tax. The appeal was disposed of with the above decisions pronounced in an open court session on a specified date.