The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Service Tax Demand cannot be raised beyond 5 5-year period of limitation. The tribunal set aside the order imposing penalty which was barred by limitation.
Based on information that various contractors are providing services to Gujarat State Police
Housing Corporation Ltd. (M/s GSPHCL) are not paying Service tax on the taxable services provided by them to M/s GSPHCL, an enquiry was initiated against the contractors. Yash Corporation, the appellant was one such contractor to whom Work Orders were given by M/s GSPHCL for the installation of electric lighting systems/D.G. Sets, etc. During the enquiry, statements of Shri Sitaram Ishwarbhai Patel, Proprietor were recorded.
The appellant was engaged in providing work relating to the installation of various electrical equipment/lighting systems, laying cables, etc. to their various clients. The Work order received included the supply of material required for the execution of the work and hence the same was like a composite contract for the supply of goods and services.
It was alleged that the work done or services provided by the appellant is classifiable as taxable service under the category of “Erection, Commissioning or Installation Services” for the period up to 31.05.2007 and under the category of “Works Contract Service” for the period 01.06.2007 onwards and not under the “Maintenance or Repair Service” as classified by the appellant.
Accordingly, a detailed Show Cause Notice 19.10.2012 was issued proposing to service tax demand under works contract services and Erection Commissioning or Installation Service along with interest and also for imposing a penalty.
After due process of law, the adjudicating authority vides impugned order confirmed the service tax demand that has been raised in the Show Cause Notice. The adjudicating authority also imposed a penalty regarding the demands confirmed. Aggrieved by the impugned order, the
appellant is now before this Tribunal.
Shri Bishan Shah Chartered Accountant appeared and argued for the appellant. It was submitted that the services were mainly provided to Government Departments and the work undertaken related to Government Buildings was either meant for residential or non-commercial purposes apart from public utilities.
The Appellant has provided services to Gujarat State Police Housing Corporation for the electrification of Jail and Residences of police officers. The services rendered to Gujarat State Police Housing Corporation are not taxable. The services rendered by the appellant are to Government Agencies and are for purposes which are not for commerce Industry or any other business or profession.
Shri P. Ganesan, Superintendent (AR) supported the findings in the impugned order.
Mere omission or merely classifying its services under an incorrect head does not amount to fraud collusion willful misstatement or suppression of facts.
In the case of Larsen & Toubro, it was held that services which involved supply or deemed supply of goods could only be classified under Works Contract Service. The appellant had been classifying its services under “Maintenance or Repair Service” / Business Auxiliary Services and paying service tax on only service components and they have also paid applicable VAT on supply of goods.
“Once the returns are filed, if Revenue thought that the self-assessment of service tax and the classification was not correct, it could have scrutinized the returns and activity of appellant and issued notices within time.”, the Tribunal viewed.
A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar Member (Technical) observed that the show cause notice was issued on 19.10.2012 for the period covered 2007-08 to 2011-12, which is clearly beyond the normal period of limitation. Therefore, demand is time-barred and cannot be sustained. For the same reason, the penalties imposed upon the appellant also cannot be upheld.
While allowing the appeal, the CESTAT set aside the Penalty imposed by the impugned order.
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