Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-06-09-22
In:-
Issue Favourable to Tax Payer ?:-
Order Date: 6 September 2022
Facts-
- The Appellant, P C Snehal Construction Co., is engaged in providing the construction service to the Torrent power Ltd, Ahmedabad. The department demanded service tax under the head of Commercial or Industrial Construction Service (CICS).
- The appellant submitted that there is no doubt that the contract is a composite contract which includes both material and service. The said fact has been confirmed in the SCN itself. Therefore, the demand under the Commercial or Industrial Construction Service is not justifiable being the service falls under Works Contract Service. Further in respect of any contract which is a composite contract, service tax cannot be demanded under CICS/ CCS for the period also after 01.06.2007 for the period in dispute in this appeal.
Issue-
- Whether the service provided by the appellant is Works Contract Service or Commercial or Industrial Construction Service, if the service is of WCS whether the demand raised under the head of Commercial or Industrial Construction Service will survive or otherwise and whether the demand of service tax on works contract till June 2007 was payable or otherwise?
Order-
- The Tribunal observed that it is revealed from the SCN that the appellant had provided the services along with material therefore, hence the services are clearly falling under WCS. As regard the second issue , the issue is no longer res- integra as held by the Hon’ble Supreme court in the case of Bhayana Builder Pvt Ltd that the value of free supply material need not to be included in the gross value service in order to avail the benefit of abatement.
- Therefore, as per the fact since the appellant has provided the service along with material their services are clearly classified as works contract service. The appellant subsequently started paying service tax on works contract service which is not disputed by the department. The Works contract service was not taxable prior to 01.06.2007 in the light of the Hon’ble Supreme Court judgment in the case of L&T Ltd. therefore, the demand prior to 01.06.2007 is clearly unsustainable as held by the Apex Court.
- On the issue where duty demand raised under the wrong classification this Tribunal in the case of Real Value Promoters Limited held that the composite contract can be subjected to service tax only under works contract service post 01.06.2007 and any demand raised under CICS/CCS on such composite contracts post 01.06.2007 is not sustainable
- When no demand was raised under Works Contract Service post 01.06.2007, the demand raised under CICS/CCS will not be sustained.
- The Tribunal held that the demand of service tax raised by the lower authorities is not sustainable. Hence the impugned order is set aside and the appeal is allowed with consequential relief.
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