Custom, Excise & Service Tax Tribunal
Vn Hegde vs Mangalore on 2 September, 2025
ST/25022/2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 25022 of 2013
(Arising out of Order-in-Appeal 539/2012 dated 11.10.2012 passed
by the Commissioner of Central Excise (Appeals), Mangalore.)
V. N. Hegde Appellant(s)
New Market Yard Ring Road (East)
Sirsi - 581 402.
VERSUS
The Commissioner of Central Excise
7th Floor, Trade Centre,
Bunts Hostel Road, Respondent(s)
Mangalore - 575 003.
APPEARANCE:
Shri N. Anand, Advocate for the Appellant. Shri M. Sreekanth, Superintendent (AR) for the Respondent.
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER NO. 21363 /2025 DATE OF HEARING: 02.09.2025 DATE OF DECISION: 02.09.2025 PER: D.M. MISRA This is an appeal filed against Order-in-Appeal No.539/2012 passed by the Commissioner of Central Excise (Appeals), Mangalore.
2. Briefly stated the facts of the case are that during the relevant period, the appellant was registered with Service Tax department for providing taxable services under the category of Page 1 of 4 ST/25022/2013 Consulting Engineer Service, Works Contract Service, etc. Alleging that the appellant had failed to discharge service tax under the category of 'Commercial or Industrial Construction Service' to one M/s. CAMPCO Limited and M/s. TSS Limited during the period from January 2005 to September 2008, show- cause notice was issued to them on 9.11.2009 proposing to recover service tax amounting to Rs.17,85,152/- with interest and penalty. On adjudication, demand was confirmed with interest and penalty. An appeal was filed before the learned Commissioner (A), who rejected the appeal and upheld the order of the lower authority. Hence, the present appeal.
3. At the outset, learned advocate for the appellant has submitted that appellant has been providing 'Works Contract Service' throughout the period of period of dispute and after introduction of the service tax on 'Works Contract Service' with effect from 01.06.2007 they discharged service tax under that category. However, the department alleging that the construction services rendered by the appellant fall under the taxable category of 'Commercial or Industrial Construction Service' demanded service tax for the period from January 2005 to September 2008. He submits that the issue is no more res integra and covered by various judgments of the Hon'ble Supreme Court in the case of CCE vs. Larsen & Toubro Limited: 2015 (39) STR 913 (SC) which was later reiterated in the case of Total Environment Building Systems P. Ltd. vs. Deputy CCT: 2022 (63) GSTL 257 (SC). Further, he submits that this Tribunal has followed the ratio laid down in the aforesaid cases and observed that demand of service tax under the category of 'Works Contract Service' prior to 01.06.2007 is not leviable and post 01.06.2007, as appellants have already discharged service tax under 'Works Contract Service', therefore, confirmation of demand under 'Commercial or Industrial Construction Service' for the said period is also unsustainable.
Page 2 of 4ST/25022/2013 Learned advocate in support of their submission that they are rendering 'Works Contract Service' and opted for composition tax during the period submitted copies of VAT returns filed from time-to-time under the Karnataka Value Added Tax Act, 2003 (KVAT Act), ST-3 Returns filed with the service tax department from 01.6.2007 onwards.
4. The learned Authorised Representative (AR) for the Revenue reiterated the findings of the learned Commissioner (A).
5. Heard both sides. We find that the appellant has been claiming from the beginning, in response to the notices issued to them, that the services rendered by them are in the nature of 'Works Contract Service' and they are registered with Karnataka Value Added Tax Act, 2003 (KVAT Act) for payment of composition tax. Soon after introduction of service tax under 'Works Contract Service' with effect from 01.06.2007, the appellant had discharged service tax at the applicable rate under that taxable category. However, in the impugned order the learned Commissioner (A) has ignored the payment of service tax under 'Works Contract Service' for the period from 01.06.2007 to September 2008 and confirmed the demand for the entire period from January 2005 to September 2008 considering the same as taxable service under the category of 'Commercial or Industrial Construction Service'. In similar circumstances, more or less for the comparable period, this Tribunal in the case of Hi-Cons Building Products vs. CCE:
Final Order No.20370/2025 dated 07.03.2025 following the judgment in the case of CCE vs. Larsen & Toubro Ltd. (supra) which was later followed in Total Environment Building Systems P. Ltd. (supra), observed as follows:
"4. Heard both sides. We find that in the instant case, there is no dispute that the work undertaken by the appellants was Page 3 of 4 ST/25022/2013 construction activity involving both labour and material. Appellants were registered contractors with Kerala Sales Tax Authorities and also paid Sales Tax/VAT under the Kerala Sales Tax Act and Kerala VAT Act on the activities under dispute. Therefore, the first condition of the definition of 'works contract service' is satisfied. Since the issue is squarely covered by the judgment of the Hon'ble Supreme Court in the case of Larsen & Toubro Ltd. (supra), the activities carried out by the appellant is falling under 'works contract service' and they are not liable to pay service tax prior to 01.06.2007. As regarding demand of service tax from 01.06.2007, since the appellant paid due amount under works contract service, the demand confirmed as per the impugned order under 'Commercial or Industrial Construction Service is unsustainable. Accordingly, the impugned order is set aside and the appeal is allowed."
Therefore, confirmation of demand of service tax under 'Commercial or Industrial Construction Service' for the period prior to 01.06.2007 cannot be sustained. Since the appellant has already discharged service tax under the category of 'Works Contract Service after 01.06.2007, therefore, demanding service tax under 'Commercial or Industrial Construction Service' for the period from 01.06.2007 to September 2008 also cannot be sustained. Consequently, the impugned order is set aside and the appeal is allowed, with consequential relief, if any as per law.
(Operative portion of the order was pronounced in Open Court on conclusion of hearing.) (D.M. MISRA) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) rv Page 4 of 4