Service Tax Leviable under Commercial Construction Service cannot be Again Demanded under ‘Works Contract Service’: CESTAT Quashes Penalty [Read Order]

The Chandigarh bench of the Customs, Excise and Service Appellate Tribunal (CESTAT) held that when any demand of service tax confirmed under the category of commercial construction cannot be de again demanded under ‘works contract services’. 

SAB Industries Limited, the appellant assessee carried out Construction works under a Contract with SIDCUL (State Industrial Development Corporation Uttrakhand Limited). 

The assessee appealed against the order passed by the Commissioner for imposing a penalty and demanding service tax. 

Sudeep Singh Bhangoo, the counsel for the assessee contended that the adjudicating authority acknowledged the fact that in terms of the contract that there was an involvement of material in addition to the work carried out and that no material was supplied by SIDCUL and the contract entered into by the assessee was indivisible composite works contract as material was involved. 

Further submitted that there was no finding of wilful suppression, mis- statement, etc. with intent to evade tax, the extended period cannot be invoked and equal penalty cannot be imposed and the benefit under section 80 of the Finance Act,1994 merits to be extended. 

Narinder Singh, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the penalty imposed by the adjudicating authority under sections 76,77,78 of the Finance Act was per the law and liable to be sustained. 

The bench observed that the demand being raised and confirmed under commercial or industrial construction service cannot also be sustained as the demand was not raised under works contract service and the demand raised by the department was not valid and liable to be deleted. 

The two-member bench comprising S.S. Garg (Judicial) and Anjani Kumar (Technical) held that the service by the assessee was not chargeable to service tax; limitation and imposition of penalties are not relevant and quashed while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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