2026-VIL-1445-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Classification of construction services - Construction of Complex Service versus Works Contract Service - Composite nature of construction contract involving supply of materials and services - Appellant engaged in construction of residential complex and internal development works for GNIDA - Whether service tax demand can be confirmed under Construction of Complex Service when show cause notice proposed such demand but adjudicating authority was directed to reconsider in light of Larsen and Toubro principle that composite services involving supply of materials and services should be classified as Works Contract Service - HELD – In Larsen and Toubro decision the Hon’ble Supreme Court has finally settled the issue as to whether a composite contract involving provision of service as well as transfer of property in goods could be covered under CICS and CCS from the date of introduction of service tax levy on such services. The Apex Court has observed that in as much as Section 67, dealing with valuation of taxable services, refers to the gross amount charged for service, the services of CICS and CCS would cover only pure service activities, as any contrary view would imply that the Government can levy service tax on the gross amount, including the value of transfer of property in goods also, which is constitutionally impermissible – Further, once SCN proposes demand under particular category of taxable service, adjudicating and appellate authorities cannot travel beyond scope of allegations and confirm demand under different category as assessee was not put on notice of such alternative category - The adjudicating authority's action to confirm demand under Construction of Complex Service without reclassifying under Works Contract Service constitutes violation of judicial protocol and failure to properly follow Tribunal's remand directions - The orders under challenge are set aside and the appeals are allowed
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