The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the construction service rendered by the assessee was not liable to pay service tax for the period before 01.06.2007.
Solux Galfab Private Limited, the appellant assessee was a service provider and had provided the services namely Business Auxiliary Service, Construction Service, Erection and Painting Service, and Goods Transport Agency Service, and did not pay any service tax before 03.07.2006.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand for service tax imposed under the category of Construction service.
N.K.Chowdhury, the counsel for the assessee contended that the composite indivisible works contracts were not liable to pay service tax before 01.06.2007, and admittedly, they are engaged in the activity of construction services along with materials.
Also submitted that the assessee does not dispute the confirmation of service tax under Business Auxiliary Service and Goods Transport Agency service and construction service w.e.f. 01.06.2007, but for the period before 01.06.2007, when the assessee was providing services along with the materials, in that circumstances, the said period before 01.06.2007, the demand for service tax was not sustainable.
N.K.Chowdhury, the counsel for the department relied on the decisions made by the lower authorities and contended that the demand raised by the revenue was as per the law and liable to be sustained.
The Bench observed that before the period 01.06.2007, there was a composite contract wherein the supply of materials was also involved, therefore, merits classification was works contract service, which was not in service tax before 01.06.2007. Therefore, no service tax was payable by the assessee for the period before 01.06.2007 under the category of construction services.
The two-member bench comprising Ashok Jindal (Judicial) and Anpazhakan (Technical) quashed the demand for service tax imposed on the construction service while allowing the appeal filed by the assessee.
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