Commissioner Of Service Tax Vs Solux Galfab Private Limited (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Kolkata recently issued a significant ruling in the case of M/s. Solux Galfab Private Limited vs. Commissioner of Central Excise & Service Tax, Kolkata. This ruling, dated September 25, 2023, sheds light on the liability of service tax on construction services provided before June 1, 2007, with a particular focus on composite contracts that involve the supply of materials.
CESTAT, Kolkata in above case held that the assessee was not liable to pay service tax on construction services for the period before June 1, 2007. As there is a composite contract wherein supply of materials is also involved, therefore, it merits classification as works contract service, which was not in service tax net prior to June 1, 2007.
Facts:
M/s. Solux Galfab Private Limited, (“the Appellant”) operated as a service provider, offering various services, including Business Auxiliary Service (“BAS”), Construction Service, Erection and Painting Service, and Goods Transport Agency (“GTA”) Service. Directorate General of Central Excise Intelligence (“DGCEI”) conducted an investigation and found that the Appellant had not paid service tax prior to July 03, 2006 for the services rendered.
A Show Cause Notice dated December 31, 2008 (“the SCN”) was issued demanding service tax along with interest and penalty under Section 78 of the Finance Act, 1994 (“the Finance Act”).
The appeal arose in response to an order issued by The Commissioner (Appeals) (“the Respondent”) vide Order in Original No. 14/Commr./ST/ Kol/2010-11 dated September 08, 2010 (“the Impugned Order”) confirmed the demand for service tax under the category of Construction Service. Aggrieved by the Impugned Order, the Appellant filed appeal before this Tribunal.
The Appellant, contended that the service tax had been confirmed under BAS, construction services and GTA services from June 1, 2007. However, the Appellant was engaged in construction services along with the supply of materials prior to June 1, 2007 and was not liable to pay services tax on the services rendered before June 1, 2007.
The Appellant further contended the payment of Rs. 42,50,000/- against the demand and if construction services were conducted prior to June 1, 2007, therefore the penalty is not leviable.
Issue:
Whether service tax is leviable on the Construction services, BAS and GTA services entered before June 1, 2007?
Held:
The CESTAT, Kolkata in the case of Service Tax Appeal No 09 of 2011 held as under:
