Works Contract classification for bulletproofing vehicles and no extended limitation where facts were fully disclosed.

A composite bulletproofing activity involving fitting steel sheets, glass and other protective materials, with transfer of property in goods and VAT paid on the goods component, was treated as Works Contract Service rather than Business Auxiliary Service. Demand for a post-negative list period could not be sustained by invoking pre-negative list provisions, and the adjudication could not travel beyond the show cause notice or the Order-in-Original. Regular ST-3 filing and absence of suppression meant the extended limitation period was not invocable. The demand and adverse findings were therefore unsustainable.

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Issues: (i) whether the activity of bullet proofing vehicles with supply of goods was classifiable as Works Contract Service or Business Auxiliary Service; (ii) whether service tax could be demanded for the post-negative list period by invoking pre-negative list provisions; (iii) whether the impugned order could travel beyond the show cause notice and the Order-in-Original; and (iv) whether the extended period of limitation was invocable.

Issue (i): whether the activity of bullet proofing vehicles with supply of goods was classifiable as Works Contract Service or Business Auxiliary Service.

Analysis: The activity involved fitting bulletproof steel sheets, glass and other protective materials into vehicles, with transfer of property in goods as well as provision of service. VAT had been paid on the goods component. The dispute had already been decided in the assessee's own case for an earlier period, and that decision had attained finality. The composite nature of the activity brought it within the scope of works contract rather than business auxiliary service.

Conclusion: The activity was correctly classifiable as Works Contract Service and not Business Auxiliary Service, in favour of the assessee.

Issue (ii): whether service tax could be demanded for the post-negative list period by invoking pre-negative list provisions.

Analysis: The period in dispute was post-negative list, whereas the demand had been confirmed with reference to provisions applicable to the pre-negative list regime. The earlier authorities relied on by the assessee supported the position that such invocation of inapplicable provisions was impermissible.

Conclusion: The demand could not be sustained on the basis of pre-negative list provisions for a post-negative list period, in favour of the assessee.

Issue (iii): whether the impugned order could travel beyond the show cause notice and the Order-in-Original.

Analysis: The show cause notice and the Order-in-Original were confined to the provision corresponding to the pre-negative list regime, but the impugned order introduced a different statutory basis. Such expansion of the case beyond the original notice and adjudication was not permissible.

Conclusion: The impugned order could not be sustained to the extent it travelled beyond the show cause notice and the Order-in-Original, in favour of the assessee.

Issue (iv): whether the extended period of limitation was invocable.

Analysis: The assessee had been regularly filing ST-3 returns and there was no suppression of material facts. A substantial part of the demand was time-barred, and the earlier decision in the assessee's own case also weighed against invocation of the extended period for the subsequent period.

Conclusion: The extended period of limitation was not invocable, in favour of the assessee.

Final Conclusion: The demand and related adverse findings were unsustainable on classification, temporal applicability, scope of notice, and limitation, and the assessee was entitled to relief.

Ratio Decidendi: A composite activity involving transfer of goods and service, with tax already paid on the goods portion, is to be classified according to its true character; demand for a later regime cannot rest on repealed or inapplicable provisions, cannot extend beyond the show cause notice, and cannot invoke the extended limitation period absent suppression of facts.

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