No Service tax  Demandable  on Works Contract Service: CESTAT [Read Order]

The Kolkata bench of the  Customs, Excise And Service Tax Appellate Tribunal (CESTAT)  held that no Service tax is demandable on Works Contract Service. It was viewed that the activity of   ‘providing and placing hard stone boulders on the slope of the embankment of PST of required thickness, including all cost of materials, labour, T&P, royalty taxes, etc.’ as directed by the service recipient.  As no demand has been raised under the category of “works contract service”, therefore, no demand is sustainable against the appellant.                    

M/s. Ashoka Bricks Industries (P) Limited, the appellant challenged the order wherein the demand of Service Tax has been confirmed against them under the category of “commercial or industrial construction service”.

During the period from February 2006 to March 2008, the appellant was awarded a work order by Orissa Power Generation Corporation Ltd., IB Thermal Power Station, Banharpali, Dist. – Jharsuguda (‘ITPS’) for the work of strengthening of peripheral bund of ash pond ‘B’ and slope of the embankment of PST at ITPS. The said work was executed by the appellant and the scope of work was ‘providing and placing hard stone boulders on the slope of the embankment of PST of required thickness, including all cost of materials, labour, T&P, royalty taxes, etc.’ as directed by the service recipient.

The Revenue was of view that during the said period, the appellant had provided the service of “commercial or industrial construction service”  to the service recipient and therefore, they are liable to pay Service Tax in terms of Section 65(25b) of the Finance Act, 1994. 

A  Show Cause Notice dated 26.04.2011 was issued to the appellant by invoking the extended period of limitation. The appellant contested the matter that the merit classification of the service is “works contract service”, but the adjudicating authority confirmed the demand under the category of commercial or industrial construction service. Aggrieved from the said order, the appellant is before us. 

The appellant has provided the service along with materials. Therefore, the said service merits classification under the category of “works contract service”, which came into the Service Tax net with effect from 01.06.2007. Admittedly, the demand has not been raised against the appellant under works contract service.

A two member bench comprising Shri Ashok Jindal, Member (Judicial) and Shri K Anpazhakan, Member (Technical)  held that the merit classification of the services rendered by the appellant is under works contract service. As no demand has been raised under the category of “works contract service”, therefore, no demand is sustainable against the appellant.

While allowing the appeal, the CESTAT  set aside the impugned order

To Read the full text of the Order CLICK HERE

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