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2016 (9) TMI 1238 - AT - Service TaxConstruction of complex service - period 16.06.2005 to 31.12.2006 - appellant engaged in construction of residential complexes - whether comes under indivisible works contract which merits classification under the category of works contract service - Held that:- in this case, it is seen, that the contract is an indivisible contract involving both transfer of property of goods and services and that appropriate sales tax/VAT is paid for the value of the goods involved in the execution of the works contract. It is also seen that the Learned Commissioner has merely confirmed demand only under construction of complex service. As per Explanation to Section 65(105)(zzzza), we find that the legislature has clarified that where the activity involves both transfer of property in goods to the service recipient, which is leviable to tax as sale of goods and also construction service, such activity would be classifiable as "works contract services". The issue regarding demand's sustainability under construction of complex services for an activity that merits classification under works contract services is no longer res-integra in view of the Hon’ble Supreme Court's judgment in the case of Commissioner of Central Excise and Customs, Kerala Vs. Larsen and Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. The Honourable Supreme Court in its judgment has held that prior to 01/06/2007, there was no section specifically levying service tax on works contract and accordingly, no service tax can be imposed on works contract services entered prior to 01/06/2007. Accordingly, we are of the view that the works contract is subject to levy of service tax only with effect from 01/06/2007 and the demand of service tax under construction of complex service is being set aside. Since the original demand itself is being set aside, demand of interest under Section 75 and penalty under Section 76 of the Finance Act, 1994 is also being set aside. As regards imposition of penalty under Section 77 of the Finance Act, 1994, we find that penalty is unsustainable as the issue as to whether the activity of construction of complex would fall under construction service or works contract service has always been under dispute and hence we find that there is a reasonable cause for not taking registration within the prescribed time limit. Invokation of extended period of limitation - Imposition of penalty under Section 78 of the Finance Act, 1994 - Held that:- it is found that there have been conflicting views prevalent on the issue and that the issue has attained finality only after the Supreme Court verdict in 2015. In view of the conflicting views being prevalent, we find that there is no suppression/fraud/contravention with an intention to evade payment of tax and accordingly, invocation of extended period of limitation also fails and consequently penalty under Section 78 is set aside. - Decided in favour of assessee
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