The Ahmedabad Bench held that mere omission or merely classifying its services under an incorrect head does not amount to fraud or collusion or willful misstatement or suppression of facts. 

The coram of Ramesh Nair, Member (Judicial) Hon’ble Mr. C.L. Mahar, Member (Technical) noted that the appellant had been classifying its services under “Maintenance or Repair Service‟/ Business Auxiliary Services and paying service tax on only service components and they have also paid applicable VAT on supply of goods. Appellant are also filing ST-3 returns and Revenue never objected to it and, therefore, the appellant could have reasonably believed it to be the correct head and continued to file returns accordingly and paying Service tax. Once the returns are filed, if Revenue was of the opinion that the self-assessment of service tax and the classification was not correct, it could have scrutinized the returns and activity of appellant and issued notices within time. The show cause notice was issued on 19.10.2012 for the period covered 2007-08 to 2011-12, which is clearly beyond the normal period of limitation. Therefore, demand is time barred and, therefore, cannot sustain. 

On the basis of information that various contractors are providing services to Gujarat State Police Housing Corporation Ltd. (M/s GSPHCL), are not paying Service tax on the taxable services provided by them to M/s GSPHCL, an enquiry was initiated against the contractors. 

Appellant was one such contractor to whom Work Orders were given by M/s GSPHCL for installation of electric lighting systems/D.G. Sets, etc. During the course of enquiry, statements of Shri Sitaram Ishwarbhai Patel, Proprietor was recorded. 

The appellant was engaged in providing work relating to installation of various electrical equipments /lighting systems, laying cables, etc to their various clients. 

The Work order received were including supply of material required for execution of the work and hence the same were in the nature of composite contract for supply of goods and services

It was alleged that the work done or services provided by appellant is classifiable as taxable service under the category of Erection, Commissioning or Installation Services for the period upto 31.05.2007 and under the category of “Works Contract Service‟ for the period 01.06.2007 onwards and not under the “Maintenance or Repair Service‟ as classified by the appellant. 

A detail Show Cause Notice 19.10.2012 was issued proposing to service tax demand under works contract services and Erection Commissioning or Installation Service along with interest and also for imposing penalty. 

After due process of law, the adjudicating authority vide impugned order confirmed the service tax demand that has been raised in the Show Cause Notice. The adjudicating authority also imposed a penalty in regard to the demands confirmed

The tribunal held that only erection, commissioning or installation of electrical and electronic devices are covered under the above entry whereas appellant are engaged in works of electrical light fittings, laying of cables, earthing works, fitting of poles, electric wiring, etc. In the present matter revenue nowhere provided any invoices or any documents by which it can be concluded that the appellant are engaged in erection, commissioning or installation of electrical and electronic devices. 

The CESTAT held that the Service tax demand in the present matter is not sustainable under works contract service on appellant’s activity.

Case Title: Yash Corporation V/s Commissioner of Central Excise & ST, Ahmedabad-iii