Works contract classification bars service tax demand under another category after the taxable date for composite construction contracts.

Composite construction contracts involving both supply of materials and labour are works contracts, and the demand could not be sustained by classifying the same activity as Commercial or Industrial Construction Service after 01.06.2007. Once works contract service became taxable from that date, the Supreme Court ruling in Larsen & Toubro governed the classification, and a contrary levy under another service category was not maintainable. The demand for the post-01.06.2007 period was therefore held unsustainable.

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Issues: Whether service tax demand could be sustained on the appellant's composite construction contracts after 01.06.2007 when the activity was treated as Works Contract Service.

Analysis: The appellant had executed composite contracts involving supply of materials and labour. Such contracts fall within the nature of works contracts. The demand for the period after 01.06.2007 could not be upheld by treating the same activity as Commercial or Industrial Construction Service, because works contract service became taxable only from 01.06.2007 and the Supreme Court's decision in Larsen & Toubro governed the issue. The Tribunal also followed its earlier view that the law declared therein continued to apply.

Conclusion: The demand for the period after 01.06.2007 was unsustainable and the issue was decided in favour of the assessee.

Ratio Decidendi: A composite contract involving both goods and labour cannot be subjected to service tax as works contract prior to its statutory taxation, and once the activity is rightly treated as Works Contract Service from the applicable date, a contrary demand under another service category cannot be sustained.

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