Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-26-07-22
In:-
Issue Favourable to Tax Payer ?:- 0
Order Date – 26 July 2022
Facts
- The appellant, Heena Enterprises and M.K. Enterprises, undertook activities such as construction or fabrication works as sub-contractor of L & T Ltd in respect of Flyover/ Bridge at various sites all over India.
- The Appellant did not charge and recover Service tax from their principal contractors namely L & T Limited, Geodesic Techniques and Techno Fab on the above activities and did not pay Service tax.
- A show cause notice was issued on 21.04.2010 u/s 73(1) of the Finance Act on the premise that although appellants had rendered service of Erection, Commissioning or Installation covered by Section 65 (39a) of the Finance Act 1994 however failed to discharge their service tax liability.
- The commissioner demanded service tax of Rs.1,24,76,425/- with interest and penalty under section 76 and Section 78 of the Act.
- Aggrieved the appellants are in appeal against the confirmation of demand of service tax.
Issue
- Whether the demand of Service tax u/s 73(2) maintainable or not?
- Whether Appellants were liable to pay Service tax under the taxable service of “Erection, Commissioning or Installation” covered by Section 65 (39a) of the Finance Act 1994 rendered at various places in India?
Order
- The authorities observed that the appellant undertook activities of fabrication of various structural items as sub-contractor of L & T, Techno Fab & ABG Shipyard. The said activity of fabrication of structures fall within the definition of taxable service of “Commercial or Industrial Construction Service” as given in Section 65 (25b) of the Finance Act 1994. Therefore, the appellants would not fall within the definition of “Erection, Commissioning or Installation” u/s 65 (39a).
- The Central Board of Excise and Customs held that Service tax is not payable by sub-contractor, by Circular dated 23 August 2007. The bench held that demand for extended period of service tax is not sustainable on limitation also.
- The Tribunal observed that appellants have obtained registration from 2007 and hence Commissioner may demand tax for the period after registration. The tax demanded is not sustainable on the grounds of limitation.
- The impugned orders are not sustainable and the order is set aside.
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