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of <h1>Appeal partly allowed, demand pre-2012 set aside. Post-2012 demand & labor contract remanded for reassessment. Penalties set aside.</h1> <h3>M/s. Ram Pratap Richpal Construction Co, Bikaner Versus Commissioner of Central Excise, Jodhpur</h3> M/s. Ram Pratap Richpal Construction Co, Bikaner Versus Commissioner of Central Excise, Jodhpur - TMI Issues Involved:1. Classification of services under 'Commercial or Industrial Construction Service' versus 'Works Contract Service'.2. Applicability of service tax on 'Works Contract Services' prior to and post-2012.3. Entitlement to abatement under Rule 2A(ii)(A) of the Service Tax (Determination of Value) Rules, 2006.4. Validity of penalties imposed under Sections 77 and 78 of the Finance Act, 1994.Issue-wise Detailed Analysis:1. Classification of Services:The appellant, engaged in providing 'construction services other than residential complex, including commercial/industrial building or civil structure' and 'works contract services', was assessed for service tax under the category of 'Commercial or Industrial Construction Service'. The appellant argued that the demand should be under 'Works Contract Service' as it involved both supply of materials and services, which is a distinct category recognized by law. The Tribunal noted that except for one labor contract, all disputed services were indeed 'Works Contract Services'. Citing the Supreme Court's judgment in Larsen & Toubro Ltd., the Tribunal held that service tax on 'Works Contract' can only be levied under the head of 'Works Contract' and not under 'Commercial or Industrial Construction Service'.2. Applicability of Service Tax on 'Works Contract Services':For the period prior to 2012, the Tribunal found that the demand under 'Commercial or Industrial Construction Service' could not be sustained as the services rendered were 'Works Contract Services'. The Supreme Court in Larsen & Toubro Ltd. clarified that 'Works Contract' is a separate species of contract and cannot be taxed under other service categories. Hence, the demand for service tax under 'Commercial or Industrial Construction Service' for the period up to 2012 was set aside.3. Entitlement to Abatement:For the period post-2012, the appellant contended they were entitled to abatement under Rule 2A(ii)(A) of the Service Tax (Determination of Value) Rules, 2006, which was denied by the Commissioner due to lack of evidence that CENVAT credit was not availed. The Tribunal noted that the Commissioner's findings were not substantiated with evidence from the appellant's ST-3 returns and other records. The Tribunal remanded the matter back to the Adjudicating Authority to verify if CENVAT credit was availed and to reassess the appellant’s liability.4. Validity of Penalties:The penalties imposed under Sections 77 and 78 of the Finance Act, 1994, were set aside. Given that the bulk of the demand was set aside, the Tribunal invoked Section 80 of the Finance Act, 1994, which provides relief from penalties if reasonable cause is shown.Conclusion:The appeal was partly allowed and partly remanded. The demand for 'Works Contract' prior to 01.07.2012 was set aside, as it could not be sustained under 'Commercial or Industrial Construction Service'. The demand for the period post-2012 and the sole labor contract for the period prior to 2012 were remanded to the Commissioner for reassessment. All penalties were set aside. The Tribunal directed the Adjudicating Authority to pass a reasoned order after verifying the appellant's records.
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