Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-27-02-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date: 27 February 2023
Parties: Shanti Construction Co vs. C.C.E. & S.T.-Rajkot
Facts –
- The Appellant, Shanti Construction Co had worked as a sub-contractor of M/s Bridge and Roof Co. (India) Ltd. and received Service tax on such work and they were not liable for payment of Service tax on such civil work carried out by them as a sub-contractor.
- However, the department contended that the sub-contractor is essentially a taxable service provider and they are liable to pay service tax. SCN was issued proposing the Service tax demand along with interest and penalty.
- Impugned Order-in-Original confirmed the demand for service tax along with interest and penalty. Aggrieved by the impugned order-in-original present Appeal has been filed.
Issue –
- Whether the appellant is liable to pay service tax?
Orders –
- The Tribunal found force in argument of Ld. Counsel that since the works performed by the appellant was along with material the demand of service tax should have been raised under the taxable category of works contract services. The demand of service under the head of Commercial or Industrial construction service is not sustainable. It is noted that the appellant’s activity of construction also involved supply of goods/ material.
- Composite contracts are taxable only w.e.f. 1-6-2007 under Works Contract service. Prior to 1-6-2007 or w.e.f. 1-6-2007, only those contracts which are purely for services, are taxable under Commercial or Industrial Construction service.
- Hence it was held that demand of service tax under commercial or industrial construction service in the present matter also not sustainable.
- Further, during the relevant period there were various Circulars and trade notices by the Commissionerate clarifying that where the principle service provider discharged his service tax liability on the entire value of the services, a separate liability cannot be imposed against the sub-contractor.
- The Tribunal stated that the ground of bona fide belief can be invoked in the present case regarding the non-liability of the sub-contractor when the main contractor is liable to discharge the full-service tax, hence extended period of limitation is not attracted.
- Accordingly, the impugned order is set aside. The appeal is allowed with consequential reliefs, in accordance with the law.
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