2023 (10) TMI 590 - AT - Service Tax

Tribunal rules in favor of Appellant, overturning Service Tax demand for Commonwealth Games-2010. Composition Scheme benefits granted.

NCC Ltd. Versus Commissioner of Central Tax, Hyderabad - GST

The Tribunal ruled in favor of the Appellant on all issues. The demand for Service Tax on construction services for Commonwealth Games-2010 was set aside ... Improper payment of service tax - claiming exemptions/ exclusions wrongly under Chapter V of the Finance Act, 1994 - construction of transport terminal - construction done for Common Wealth Games – 2010 - Construction of APMC Market - Work executed for NG, Ranchi -short payment of Service Tax on certain ongoing projects in terms of sub rule (2) of Rule 3 of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Benefit of abatement (for material) under the Notification No. 1/2006-ST - extended period of limitation. Construction of transport terminal - HELD THAT:- The same was exempt under the definition of works contract service under Section 65 (105) (zzzza), firstly, because the definition read with explanation (II) (b) specifically provides construction of a new building or civil structure primarily for purposes of commerce or industry. Further, the main definition provided the exclusion of transport terminals. Further, it is found that from 01.07.2012 as admittedly the service was provided to Government or Government Corporations, the same are exempt under Clause No. 12 of Notification No. 25/2012-ST wherein clause – A provides for exemption of services provided to Government, Local Authorities or Government Authorities in respect of a civil structure or other original work meant predominantly for used other than for commerce nature or any other business or profession. Construction done for Common Wealth Games – 2010 - HELD THAT:- The same was an International Sporting Event and not a commercial activity. Accordingly, the same was exempt and not taxable. Construction done for Delhi University - HELD THAT:- The Learned Commissioner have erred in observing that the appellant could not prove that services for these purposes are non-commercial in nature. It is held that inclusion of the clause in the agreement that service tax if any has to be borne by the contractor/ service provider, does not alter in any way the provisions of service tax with respect to the tax liability. It is also found that the works of construction of transport terminal is also exempt from service tax under clause 12(a) of Notification No. 25/2012-ST, as the said clause provided for exemption in respect of construction etc., of interalia terminals for road transport for use by general public. The findings are supported by clarification by Board Circular vide its letter number F.No. 137/93/2009-CX 4 dated 07.01.2010. Construction of APMC Market - HELD THAT:- The issue is no longer res- integra as it had been held not taxable by this Tribunal in the case of M/S. A.B. PROJECTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [2017 (8) TMI 518 - CESTAT MUMBAI] - Further, non-taxability with respect to work for Andhra Pradesh has been clarified by the Board vide Circular No. 157/8/2012-ST read with Circular No. 80/10/2004-ST. - It is however, found that post 01.07.2012 the services provided to APMC are in the nature of construction is exempted, under Notification No. 25/2012-ST as amended by Notification No. 2/2014-ST. Since the services were rendered to the State Government or a Government Authority. Ongoing projects (which were started prior to 01.06.2007) - HELD THAT:- The issue of ongoing projects prior to 01.06.2007 stands settled by Hon’ble Supreme Court in the subsequent ruling of L & T in [2015 (8) TMI 749 - SUPREME COURT]. In the circumstances, as the scheme of composition was introduced for the first time for ease of business, and to avoid harassment to the assessees, the window to pay tax under the composite scheme was provided. The benefit of the scheme to the appellant was denied as it could not opt for composition scheme in due time. Thus, the benefit of composition scheme is available to the assessee, and accordingly the denial of benefit of composition scheme is set aside. Benefit of abatement (for material) under the Notification No. 1/2006-ST - HELD THAT:- The appellant had initially taken the Cenvat Credit which they had reversed under intimation to Revenue. Such claim have not been found to be wrong. Hon’ble Supreme Court have held in the case of Chandrapur Magnet Wires [1995 (12) TMI 72 - SUPREME COURT] that where the Cenvat Credit taken is reversed, it amounts to Cenvat Credit have never been taken. Accordingly, the denial of benefit of abatement under Notification No. 1/2006-ST is bad and is set aside. Subsequent to the ruling of Larson & Toubro [2015 (8) TMI 749 - SUPREME COURT], Tribunal and the High Courts in several matters have held that the assessee are entitled to composition scheme, particularly in the case of Mehta Corporation Vs CCE, Jaipur [2014 (5) TMI 1131 - CESTAT NEW DELHI]. Work executed for NG, Ranchi - HELD THAT:- So far the demand of tax with respect to the work executed for NG, Ranchi Rs. 7,04,639/- and Rs. 7,10,971/- is concerned, the same is set aside and allowed by way of remand. The appellant shall file fresh computation of tax for this work before the Adjudicating Authority. Same will be accordingly verified and in case any short fall is pointed out, the appellant shall deposit the same. Extended period of limitation - HELD THAT:- The extended period of limitation could not have been invoked, in the facts and circumstances, the appellant was registered with the Department and regularly filing their ST-III returns. Further, appellant maintains proper books of accounts which are subject to audit by the company auditor and also under tax audits. Further, whatever demands have been raised, has been raised based on the records maintained by the appellant and there is no mis representation, or any suppression or mis statement or fraud on the part of the appellant. Accordingly, the extended period of limitation is not available to Revenue. All the penalties imposed are set aside. The impugned orders are set aside - Appeal allowed. Issues Involved:1. Liability of Service Tax on construction services for Commonwealth Games-2010 (CWG-2010).2. Liability of Service Tax on construction of Transport Terminals.3. Liability of Service Tax on construction of Agricultural Produce Market Committee (APMC) markets.4. Applicability of Composition Scheme for ongoing projects.5. Demand for short payment of Service Tax as per ST-3 Return.Summary:1. Liability of Service Tax on construction services for Commonwealth Games-2010 (CWG-2010):The Appellant argued that the construction services provided for CWG-2010 were not commercial in nature and hence not liable for Service Tax. The Tribunal agreed, citing that CWG-2010 was an international sports event, not a commercial activity, and thus exempt from Service Tax under Section 65(105)(zzzza) of the Finance Act, 1994. The demand for Service Tax for this period was set aside.2. Liability of Service Tax on construction of Transport Terminals:The Tribunal held that transport terminals constructed by the Appellant were for public use and not primarily for commercial purposes. For the period prior to 01.07.2012, such services were excluded from the definition of 'works contract service' under Section 65(105)(zzzza). Post 01.07.2012, these services were exempt under Clause 13(a) of Notification No. 25/2012-ST. The Tribunal found that the presence of commercial establishments within the terminals did not alter their primary non-commercial character.3. Liability of Service Tax on construction of Agricultural Produce Market Committee (APMC) markets:The Tribunal concluded that the construction services provided for APMC markets were not commercial in nature. APMC markets are statutory bodies set up to facilitate farmers and are not operated for profit. Therefore, such services do not fall under the purview of 'works contract service' and are exempt from Service Tax both prior to and post 01.07.2012 as per Notification No. 25/2012-ST.4. Applicability of Composition Scheme for ongoing projects:The Appellant contested the denial of the Composition Scheme benefits for ongoing projects. The Tribunal held that the benefit of the Composition Scheme could not be denied merely due to non-fulfillment of procedural requirements under Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. The Tribunal cited several precedents to support this view and set aside the denial of the Composition Scheme benefits.5. Demand for short payment of Service Tax as per ST-3 Return:Regarding the alleged short payment of Service Tax for the period October 2010 to March 2011, the Tribunal found that the Appellant had informed the Department about the short payment and had requested adjustment of the amount already deposited during an ongoing investigation. The Tribunal held that this did not constitute tax evasion and set aside the penalty imposed under Section 78.Conclusion:The Tribunal set aside the impugned orders, allowed the appeals, and granted consequential reliefs to the Appellant. The demands for Service Tax, interest, and penalties were found to be unsustainable. The Tribunal also remanded the issue of tax liability for NGHC-Ranchi for fresh computation and verification. The extended period of limitation was held to be inapplicable, and all penalties were set aside.