Service Tax cannot be levied on ‘Pandal and Shamiana Services’ before 1.6.2007: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the service tax cannot be levied on “Pandal and Shamiana services” before 1.6.2007 since the “works contract services ” could not have been charged with service tax under any other head either before or after 1.6.2007.

The appellant, M/s Sconce Global Private Limited  is engaged in the business of setting up stalls for various companies at exhibitions. Photographs of some stalls such as Korea Pavilion 2014 World Food of India, Mumbai,. The appellant had classified its services under the head of erection, commissioning and installation service and commercial or industrial construction service prior to June 01, 2007 and it has classified them as “works contract service” after June 01, 2007 when Section 65(105)(zzzza) was introduced as a separate taxable service in the Finance Act, 1994. The department demanded service tax covering the period 2006- 2007, 2016-2017. All the show cause notices proposed classifying the appellant’s service under the head “Pandal and Shamiana” services and recover differential duty from the appellant.

A division bench comprising Justice Dilip Gupta, President and Mr. P.V. Subba Rao, Member (Technical) observed that the services provided by the appellant were on turnkey basis and a composite amount is charged by the appellant for its services and for the goods used in providing them.

“It is undisputed that the appellant treated this as works contract services and paid VAT to the respective State Governments as appropriate. The appellant had classified these services with effect from 1.6.2007 under the head “works contract service” and had classified them under the heads of “commercial or industrial construction service” and “erection commissioning or installation service” prior to this date and paid service tax. Even while paying service tax under these heads before 1.6.2007 the appellant had claimed abatement as available under various notifications,” the Tribunal said.

“Since it is undisputed that the appellant’s contract involved provisions of services as well as supply/deemed supply of goods they can only be classified under the head “works contract services” as per the law laid down in Supreme Court in Larsen & Toubro. Such services could not have been charged with service tax under any other head either before or after 1.6.2007. The show cause notices demanding service tax under the head “Pandal and Shamiana services” from the appellant, therefore, cannot be sustained. Consequently, the impugned orders need to be set aside,” the Tribunal added.

Shri A.K. Sood & Ms. Madhumita, Advocates appeared for the Appellant.

To Read the full text of the Order CLICK HERE

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