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of <h1>Works contract service tax demand set aside where genuine 80% material 20% service bifurcation established</h1> CESTAT NEW DELHI allowed the appeal against service tax demand on works contract service. The appellant had contracts clearly specifying 80% material ... Evasion of payment of service tax on 80% of the contract value considering the same as supply of material - period from 01.04.2012 to 30.06.2012 and from 01.07.2012 to 30.01.2014 - demand under works contract service. Period from 01.04.2012 to 30.06.2012 and from 01.07.2012 to 30.01.2014 - HELD THAT:- It is not in dispute that the service tax has been demanded on amount of Rs. 6,80,248/- which was received by the appellant on trading of goods. No service tax could have been levied. It also needs to be noted that the appellant discharged VAT liability on the aforesaid amount. Demand raised under works contract service - HELD THAT:- The works contract awarded to the appellant clearly mentions the value of material as 80% of the contract value and service portion as 20% of the contract value. The contracts awarded to the appellant are composite in nature as they involve transfer of material as well as rendering of service. Learned consultant for the appellant has placed reliance upon the decision of the Tribunal in the matter of the appellant in M/S. UNITED ELECTRICALS AND MECHANICAL WORKS VERSUS CST, DELHI [2017 (4) TMI 1133 - CESTAT NEW DELHI]. The Commissioner (Appeals) has distinguished this decision for the reason that the bifurcation of 80% and 20% was artificially created - it was held in the said case that We have perused a few work orders, which clearly stipulated that 80% of the value shown to have suffered VAT with reference to supply of materials. Considering the ratio followed in the decided cases cited above, in identical set of facts, we find that the impugned order is not sustainable. Accordingly, the same is set aside - The Commissioner (Appeals) was not justified in distinguishing the aforesaid decision of the Tribunal rendered in the case of the appellant. The order dated 06.06.2018 passed by the Commissioner (Appeals) is set aside except to the extent it has confirmed the demand of service tax on trade discount - Appeal allowed. Issues involved:The issues involved in the judgment are demand on trading of goods/pure sale, demand on composite works (works contract & repair works), and demand on trade discount.Demand on Trading of Goods/Pure Sale:The appellant undertook activities for various entities by supplying goods like electric motors, pump sets, and water pipes. The Department alleged evasion of service tax by artificially breaking figures into an 80:20 ratio. The appellant argued that the service tax demand pertained to goods sold on which VAT was already discharged. The Tribunal held that no service tax could be levied on the amount received from trading goods where VAT was already paid.Demand on Composite Works (Works Contract & Repair Works):The appellant received work orders specifying 80% of the contract value as material and 20% as service. The Department alleged artificial bifurcation of values, leading to the evasion of service tax. The Tribunal referred to a previous decision in favor of the appellant, emphasizing the importance of examining the actual quantity of materials supplied. The Tribunal set aside the Commissioner's decision, stating that the bifurcation was not artificial and upheld the appellant's claim.Demand on Trade Discount:The demand on trade discount was confirmed by the Commissioner as no submissions were made by the appellant on this issue. The Tribunal confirmed the Commissioner's decision on this issue.In conclusion, the Tribunal set aside the Commissioner's order regarding demand on trading of goods/pure sale and demand on composite works, citing previous decisions in favor of the appellant. The demand on trade discount was confirmed. The appeal was allowed in part, with the order dated 06.06.2018 passed by the Commissioner (Appeals) being set aside except for the service tax demand on trade discount, which was confirmed.
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