By TIOL News Service

NEW DELHI, SEPT 27, 2017: THE Appellant under takes execution of construction contracts and is registered with the Service Tax Department. It had undertaken two civil construction projects - one was the Dilli Haat, INA, New Delhi and the other the Dilli Haat, Pitampura, Delhi.

A SCN was issued demanding Service Tax of Rs.93,01,154/- stating that the aforementioned construction projects were entirely commercial in nature and were amenable to service tax under the category of Commercial and Industrial Construction Service; that the Assessee was entitled to the benefit of the exemption notification No.15/2004-ST, 1/2006-ST.

In adjudication, the Commissioner concluded that since neither Dilli Haat at INA nor at Pitam Pura could be termed as a commercial construction, the demand of service tax had to be dropped.

Aggrieved, the Department went in appeal before the CESTAT.

The respondent Assessee contended that in view of the decision of the Supreme Court in  Larsen & Toubro Ltd. - 2015-TIOL-187-SC-ST , no service tax could be charged on composite works contract prior to 1st June, 2007.

The CESTAT remanded the matter to the Adjudicating Authority for verifying whether composite works contracts had been executed by the Assessee.

Now, the assessee is before the Delhi High Court challenging this remand order of the Tribunal.

The High Court noted that there was no dispute that what was executed by the Appellant was a composite contract of labour and services and in these circumstances, there was no occasion for the CESTAT to remand the matter to the Adjudicating Authority for verifying that fact.

The Counsel for the Revenue submitted that the Assessee had sought to plead a new case before the CESTAT that the contracts executed by it were composite contracts and it was for this reason that the CESTAT remanded the matter to the adjudicating authority.

To this averment, the High Court observed -

"12. On a plain reading of the SCN, it is apparent that it was never disputed by the Department that what was undertaken by the Appellant was a composite contract of construction which involved labour and service elements. The grant of rebate to the Assessee as noted in the SCN was itself an acknowledgment of this. If that was never in issue, the question of remanding the matter to the Adjudicating Authority for verifying that fact did not arise."

The order of the CESTAT was set aside and the appeal of the assessee was allowed.

(See 2017-TIOL-2028-HC-DEL-ST)