2026-VIL-465-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Classification of service under Works Contract Service (WCS) or Construction of Residential Complex Service (CRCS) - The appellant had challenged the classification of the services rendered by it under WCS instead of CRCS - Adjudicating authority had held that the construction of residential houses involves transfer of property in goods, and therefore, the same is classifiable under WCS instead of CRCS. Appellant argued that it had paid service tax under the category of CRCS availing the abatement of 33% of the gross value – HELD - Once a specific heading of WCS was introduced, the activity which was earlier classified under CRCS would also come within the purview of WCS, if there is transfer of property in goods in the execution of the contract. Admittedly, there was transfer of property in goods involved in the execution of the contract and VAT had also been paid. Therefore, the classification of the services under WCS was correct. However, the matter is remanded back to the adjudicating authority for the purpose of recalculating the demand by extending the benefit of composition scheme available for WCS – The appeal is allowed by way of remand - Exemption from service tax on irrigation and water supply projects - Appellant claimed exemption from levy of service tax on earth work excavation and construction services relating to Kovvada Kalva Reservoir scheme and on civil works relating to Godavari Drinking Water Project awarded by Greater Visakhapatnam Municipal Corporation (GVMC) – HELD - The adjudicating authority had not brought on record any evidence that the said activities would fall under the category of WCS. Merely because of an expression 'commissioning on turnkey basis' in the agreement, it cannot be presumed that there is transfer of property in goods while executing the said project. There is no dispute that these works were relating to irrigation projects and water supply projects, and therefore, the same should be excluded from the purview of service tax.
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