The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no demand of Service Tax Sustainable under Commercial & Industrial Construction Service as at material time the works contract service was not taxable.
During 16.06.2005 to 31.03.2010 the appellant’s were engaged in providing various services to their clients and were discharging service tax under the head of Commercial and Industrial Construction Services availing benefit of Notification No. 01/2006 dated 01.03.2006. Notification No. 01/2006 provided abatement of 33% on the gross amount charged for the purpose of discharge the service tax. However, the said exemption was not available to the activity which qualified as finishing and completion work. The Show Cause Notice sought to deny the benefit of service tax exemption Notification No 01/2006 on the ground that the services provided by the appellant qualified as finishing and completion work.
The appellant pointed out that the activities undertaken by them were inclusive of supply of material and therefore qualified as Works Contract. He pointed out that for the period prior to 01.06.2007 no service tax was leviable on works contract in terms of decision of the Apex Court in case of Larsen & Toubro Ltd. He pointed out that their service was covered under the category of Works Contract Service and they have been discharging the tax under VAT/ Sales Tax under the category of Works Contract. In support of the said argument the appellant produced the registration certificate which shows that the appellant was registered under the category of Works Contract with Sales Tax Authorities in Gujarat.
The coram of Judicial Member, Ashok Jindal and Technical Member, Raju held that the demand has
been raised under the category of the Commercial or Industrial Construction Services. The claim of the appellant is that period prior to 01.06.2007 the works contract services were not chargeable to service tax. Moreover, for the period after 01.06.2007 their service would qualify as Works Contract Service and not Commercial or Industrial Construction service and therefore, the demand cannot be sustained under Commercial & Industrial Construction Service.
“We have taken up a few contracts which show that they were engaged in the activity of painting/ coating various structures to prevent corrosion. They have also engaged themselves in Concrete Work. They have claimed that these services fall under the category of Works contract service. There are few contracts which involve construction of concrete work as well. The appellant has submitted a long list of contracts,” the CESTAT added.
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