2025 (3) TMI 901 - AT - Service Tax

Appellant's services classified as Works Contract, exempt from service tax; appeal allowed based on legal precedents.

M/s Singal and Sons Construction Pvt. Ltd. Versus Commissioner of Central Excise, Customs (Adjudication), Rohtak

The court determined that the appellant's services were correctly classified as Works Contract Services, not subject to service tax under Construction of ... Classification of services - Works Contract Services or Construction of Complex Services - period from April 2009 to September 2012 - services provided to the Housing Board Haryana are exempt from service tax - HELD THAT:- The matter is covered by the decisions of Bajrang Lal Gupta Vs Commissioner of Delhi-III [2023 (6) TMI 246 - CESTAT CHANDIGARH] for the Pre Negative List period and by Bharat Bhushan & Company Vs State of Haryana [2016 (8) TMI 722 - PUNJAB AND HARYANA HIGH COURT] for the Post Negative List period. Bajrang Lal Gupta deals with the exemptions for the services provided for the Pre Negative List period holding that 'the Hon'ble Apex court in the case of CCE v. Larsen & Toubro Limited [2015 (8) TMI 749 - SUPREME COURT] has settled the issue relating to works contract service which includes supply of material and labour for consideration and the same is taxable only from 1-6-2007.' It was also held that 'even for the period after 1.06.2007, various decisions of the Tribunal have consistently held that the composite contract or works contract service even after 1-6-2007 cannot be taxed under Construction of Complex Service under section 65(105) (zzh) read with Section 65 (30a) of the Finance Act, 1994.' Conclusion - i) The appellant's services were correctly classified as Works Contract Services and not subject to service tax under Construction of Complex Services. ii) The services provided to the Housing Board Haryana were exempt from service tax as they were provided to a governmental authority for non-commercial purposes. Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the services provided by the appellant fall under the category of 'Works Contract Services' or 'Construction of Complex Services' for the period from April 2009 to September 2012.Whether the services provided to the Housing Board Haryana are exempt from service tax under the relevant legal provisions and precedents.Whether the decisions in Bajrang Lal Gupta and Bharat Bhushan & Company are applicable to the present case for the Pre and Post Negative List periods, respectively.ISSUE-WISE DETAILED ANALYSIS1. Classification of Services: Works Contract vs. Construction of Complex ServicesRelevant Legal Framework and Precedents: The classification of services is governed by the Finance Act, 1994, particularly Section 65(105)(zzh) read with Section 65(30a), which pertains to Construction of Complex Services. The landmark case of CCE v. Larsen & Toubro Limited provides a precedent for classifying services involving both material and labor as Works Contract Services, which became taxable from June 1, 2007.Court's Interpretation and Reasoning: The Court agreed with the appellant's contention that the services provided were in the nature of Works Contract Services, as they involved a composite contract of material and labor. The Court referenced the decision in Bajrang Lal Gupta, which established that such services are not taxable under Construction of Complex Services even after June 1, 2007.Key Evidence and Findings: The appellant's services involved construction of residential houses for the Housing Board Haryana, which aligns with the definition of Works Contract Services. The Court found no evidence to classify these services under Construction of Complex Services.Application of Law to Facts: The Court applied the legal principles from Larsen & Toubro and Bajrang Lal Gupta to determine that the appellant's services were correctly classified as Works Contract Services.Treatment of Competing Arguments: The Department's argument that the services were taxable under Construction of Complex Services was dismissed based on established legal precedents.Conclusions: The Court concluded that the services provided by the appellant were Works Contract Services and not subject to service tax under Construction of Complex Services.2. Exemption from Service Tax for Services Provided to Governmental AuthoritiesRelevant Legal Framework and Precedents: Section 93 of the Finance Act, 1994, and Notification No. 25/2012-S.T., dated June 20, 2012, provide exemptions for certain services provided to governmental authorities. The decision in Bharat Bhushan & Company clarified the application of these exemptions.Court's Interpretation and Reasoning: The Court referenced the Bharat Bhushan & Company decision, which held that services provided to governmental authorities for non-commercial purposes are exempt from service tax. The Housing Board Haryana qualifies as a governmental authority under this framework.Key Evidence and Findings: The Housing Board Haryana is established under the Haryana Housing Board Act, 1971, and is controlled by the State Government. The services provided were for residential purposes, not for commerce or industry.Application of Law to Facts: The Court applied the exemption provisions to the appellant's services, determining that they were exempt from service tax as they were provided to a governmental authority for non-commercial purposes.Treatment of Competing Arguments: The Department's contention that the services were taxable was rejected based on the clear applicability of the exemption provisions.Conclusions: The Court concluded that the services provided to the Housing Board Haryana were exempt from service tax under the relevant legal provisions.SIGNIFICANT HOLDINGSCore Principles Established:Services involving both material and labor, classified as Works Contract Services, are not taxable under Construction of Complex Services, as established in Larsen & Toubro and Bajrang Lal Gupta.Services provided to governmental authorities for non-commercial purposes are exempt from service tax, as clarified in Bharat Bhushan & Company.Final Determinations on Each Issue:The appellant's services were correctly classified as Works Contract Services and not subject to service tax under Construction of Complex Services.The services provided to the Housing Board Haryana were exempt from service tax as they were provided to a governmental authority for non-commercial purposes.The appeal was allowed with consequential relief, as the matter was fully covered by the cited precedents for the entire period in question.