2025-VIL-962-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Dropping of proceedings – Investigation carried out by department revealed that Respondent has entered into contracts with various parties for design, drawing and construction work, but has not paid service tax towards such turnkey projects – Department viewed that services rendered by Respondent would be classifiable under "Erection, Commissioning or Installation Services" and "Commercial or Industrial Construction Service" – Department issued show cause notice to Respondent demanding service tax under Section 73(1) of the Act – After following due process of law, Adjudicating authority has dropped proceedings initiated under show cause notice – Whether impugned Order in Original is tenable in law – HELD – When an adjudicating authority has proceeded to adjudicate a matter by placing reliance on an Apex Court decision and other binding decisions of the higher judicial forums in strict adherence to judicial discipline, and has passed an order in his quasi-judicial capacity, which is fair, legal and proper, the same cannot be set aside in deference to the Department’s administrative instruction to keep the matter in call book – Further, only those contracts which are services simpliciter, not involving supply of materials, will be subject to levy of service tax under categories of Commercial or Industrial Construction Services and Erection, Commissioning and installation services – Turnkey projects executed by Respondent under composite contracts cannot be classified and levied to service tax under aforesaid categories – Classification sought to be applied and consequential demand raised under those categories in terms of show cause notice cannot legally sustain – There is no illegality or perversity in impugned order in original, which is clearly tenable on merits – Impugned order in original passed by Adjudicating authority is sustained and Revenue appeal is dismissed
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