2025-VIL-593-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Interior Decorator Services, Works Contract, Limitation Period, Burden of Proof - The appellant is engaged in the business of supplying, assembling, fixing, installation and erection of cubicles/modular furniture. During the audit, it was found that the appellant had charged and collected service tax at the rate of 12.24% only on 33% of the value and had availed abatement of 67% on the realized taxable value of interior decorator services - Department of the view that the appellant had to discharge service tax on the 67% of the income received as consideration, which the appellant had claimed as abatement - Department issued a show cause notice proposing to demand the differential service tax along with interest and penalty under the extended period of limitation - Whether the demand made on the appellant for rendering "Interior Decoration Services" is tenable - HELD - The services provided by the appellant were in the nature of a composite works contract involving sale of goods as well as work and labour, and not a contract of services simpliciter. Relying on the Supreme Court decisions in CCE v. Larsen and Toubro and Total Environment Building Systems Pvt Ltd v. Deputy Commissioner of Commercial Taxes, the Tribunal held that service tax was not leviable on the service element of a works contract prior to the amendment made by the Finance Act, 2007, which introduced the definition of "works contract" under Section 65(105)(zzzza) with effect from June 1, 2007. Therefore, the demand made on the appellant under the category of "interior decorator service" could not be sustained - The impugned order is set aside and the appeal is allowed - Whether the invoking of the extended period of limitation is tenable - HELD - The show cause notice did not allege any "wilful misstatement or suppression of facts with intent to evade payment of duty", as required to invoke the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 - the findings of the lower authorities that the appellant had the intention to evade service tax were without any basis, as there was no evidence of any positive or deliberate act on the part of the appellant with the intention to evade payment of duty - Further, the appellant had made its position clear in the reply to the audit query, and there was no allegation of suppression. In such circumstances, the Department could not have invoked the extended period of limitation.
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