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of <h1>Tribunal upholds service tax demand on construction services provider, emphasizes inclusion of materials.</h1> The Tribunal upheld the demand for service tax against the appellant, a construction services provider, amounting to Rs.2,18,44,015/-, along with ... Benefit of Notification No. 1/2006 - Commercial or Industrial Construction service and Works contract service – Demand of Service tax - Penalty u/s 76, 77 and 78 - Held that:- The appellant was engaged in providing the service of commercial or industrial construction service and works contract service – Held that:- Assesse had not included the value of steel and cement supplied by the service receivers for the purpose of payment of service tax and at the same time the assesse had availed the benefit of Notification No.1/2006-ST which provides for abatement subject to the condition that the gross amount shall include the value of goods and materials supplied or provided or used by the provider of the construction service for providing such service - Relying upon Jaihind Projects Ltd. vs. CST, Ahmedabad [2010 (1) TMI 186 - CESTAT, AHMEDABAD] - the value of materials provided or supplied or used by the service provider were required to be included - the value of goods supplied by the receiver to the provider were required to be included if the benefit of Notification No.1/2006 was availed - stay not granted. Issues:1. Whether the appellant correctly availed the benefit of Notification No.1/2006 for abatement of service taxRs.2. Whether the value of steel and cement supplied by the service receivers should be included in the gross amount for service tax calculationRs.3. Whether penalties under Sections 76, 77, and 78 of the Finance Act, 1994 are justifiedRs.Analysis:Issue 1: Benefit of Notification No.1/2006The appellant, engaged in construction services, availed the benefit of Notification No.1/2006 for abatement of service tax. However, discrepancies arose as the value of steel and cement supplied by service receivers was not included in the service tax calculation. The impugned order confirmed a demand for service tax amounting to Rs.2,18,44,015/- along with penalties under Sections 76, 77, and 78 of the Finance Act, 1994.Issue 2: Inclusion of Steel and Cement ValueThe appellant argued that service tax should be based on the gross amount received from the service receiver, whether in monetary form or otherwise. They contended that the value of steel and cement provided by the service receivers should not be considered as additional consideration. Citing the decision of Cemex Engineers vs. CST, Cochin, the appellant asserted that the value of materials supplied by the service receiver need not be included for service tax calculation.Issue 3: Penalties ImposedThe Additional Commissioner relied on the decision of Jaihind Projects Ltd. vs. CST, Ahmedabad, which emphasized the inclusion of materials provided by service receivers in the service tax calculation post-amendment. The Tribunal's decisions in subsequent cases further supported this stance, requiring the appellant to deposit the entire amount of service tax and interest. The Tribunal, considering the stay application, directed the appellant to deposit the balance amount of service tax within six weeks, waiving the pre-deposit requirement for interest and penalties during the appeal's pendency.In conclusion, the Tribunal found that the appellant failed to establish a prima facie case for complete waiver, necessitating the deposit of the remaining service tax amount. The decision highlighted the importance of considering the value of materials supplied by service receivers for service tax calculation, as per relevant notifications and legal precedents cited during the proceedings.
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