2026 (2) TMI 601 - AT - Service Tax

Service tax on construction, maintenance and consulting engineer services: pre-01.06.2007 liabilities held not leviable, order set aside.

Whether service tax applied to construction of residential and commercial complexes, maintenance/repair and consulting engineer services before 01.06.2007 ... Levy of service tax on construction of residential complex, construction of commercial complex services, maintenance or repair services and consulting engineers services - nature of works contract services prior to 01.06.2007 - HELD THAT:- As regarding the issue on merit is covered by the judgment of the Hon’ble Supreme Court in the matter of M/s. Larsen & Tourbo Ltd. [2015 (8) TMI 749 - SUPREME COURT] and the judgment of the Hon’ble Supreme Court in the case of Total Environment Building Systems [2022 (8) TMI 168 - SUPREME COURT] In the case of M/s. Four EF Constructions vs. Commissioner of Service Tax, Bangalore [2024 (12) TMI 1300 - CESTAT BANGALORE] wherein it has held that appellant is not liable to pay service tax prior to 01.06.2007 under the category of ‘Erection Commissioning or Installation Services’ in view of the decision of Hon’ble Supreme Court in the case of M/s. Larsen & Tourbo Ltd. and for the period after 01.06.2007, the activity of the appellant is classifiable under ‘works contract service’ and is eligible for composition scheme under works contract. Following the ratio of the above said decisions, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law. Issues: Whether service tax was leviable on construction of residential complex, construction of commercial complex, maintenance/repair services and consulting engineers services as works contract services for the period prior to 01.06.2007.Analysis: The question turns on the introduction and applicability of the statutory definition of 'works contract' and the date from which the service component of works contracts became taxable. Reliance is placed on the principle that the definition of works contract for service tax purposes was inserted as Section 65(105)(zzzza) and that the amendment making the service element of works contracts taxable operates with effect from 01.06.2007. Earlier authorities applying this principle distinguished service tax liability before and after the statutory amendment and treated maintenance/repair and related activities falling within works contract as not taxable under service tax prior to the amendment. Consistent decisions interpreting these propositions were applied to the facts concerning the nature of the appellant's work orders and the characterisation of activities as works contract.Conclusion: The service tax demand and penalties confirmed for the period prior to 01.06.2007 are not sustainable; the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.