TaxTMI 
TaxTMI 
2009 (9) TMI 342
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.... common dispute, appeal No. ST/690/08 is taken up for examination in detail. 2. The appellants SDL are engaged in provision of, inter alia, commercial or industrial construction services and construction of residential complex. During the material period, they availed the benefit of Notification No. 12/2003-ST, dated 20-6-2003. After due process of law, the Commissioner found that the appellants had wrongly availed the said benefit in that it had failed to fulfil the conditions to qualify for the exemption. Accordingly, he confirmed demand of differential duty of Rs. 69,28,94,102 under section 73(1) of the Finance Act, 1994 (the Act) along with applicable interest and imposed penalty at the rate of Rs. 200 per day for everyday during which the default continued or 2 per cent of such tax per month whichever was higher starting from the first day after the due date till the date of actual payment of the outstanding amount of Service tax under section 76 of the Act. 3. In the appeal filed before the Tribunal, SDL submitted that they were engaged in construction of commercial or industrial buildings, construction of residential buildings and maintenance and repairs of those buildings....
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.... of Notification No. 12/2003 exempting the value of goods and materials sold during the provision of service was available subject to documentary evidence of such sale. The appellants had not produced documents to evidence sale of materials for which exemption was claimed. Appellants had wrongly followed the percentage formula prescribed under KVAT for determining the value of goods and materials involved in the construction contract. The appellants were liable to pay interest and were liable for penalty. 4. The appellants have taken the following grounds to assail the order impugned:— (a) The construction activity undertaken by the appellant was in terms of turnkey contracts. A 'works contract' could not be vivisected and part of it subjected to tax as held by the Tribunal in the case of Daelim Industrial Co. v. CCE 2003 (155) ELT 457/[2007] 7 STT 184 (Delhi - CESTAT). It is claimed that the CBEC vide Circular No. 98/1/2008-ST, dated 4-1-2008 had clarified that prior to 1-6-2007 construction contracts were single composite contracts and the Department accepted that a composite work contract could not be vivisected. The ratio of the Daelim Industrial Co.'s case (supra) applied ....
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....covered under the service tax and not sale. Therefore, impugned activity clarified to be 'works contract' under the above Circular could not be taxed for the period prior to 1-6-2007. The Commissioner had wrongly held that the activity undertaken by the appellants was classifiable under the taxable service of construction of commercial or industrial buildings and construction of residential complex service. (b) That the appellant had paid Service tax under a particular category of taxable service for the period prior to 1-6-2007 would not make the appellant, a service provider and they relied upon the decision of the Tribunal in the case of Mahavir Generics v. CCE 2004 (170) ELT 78/[2007] 6 STT 523 (New Delhi - CESTAT) in support. The Tribunal had held that the appellant having once got registered as a clearing and forwarding agent for the purpose of service tax under a misunderstanding could not be compelled to continue such registration if they were not liable under law. (c) As regards the point in issue relating to the exemption under Notification No. 12/2003 and Notification No. 1/06-ST, it is submitted that the intention behind the Notification was to tax only the service el....
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....project cost during the period 2006-07 and therefore, there was no short payment of service tax as service tax was paid on 30 per cent of the project cost. The appellant relied on the following observations contained in the decision of the Tribunal in the case of Shilpa Colour Lab v. CCE [2007] 8 STT 102 (Bang. - CESTAT) in support of the claim that value of the goods and materials could not be included in the value of service for levy of service tax when the assessee had maintained account of the inputs used during the course of provision of service. "8.5 This Bench had occasion to deal with this issue when the benefit of deduction was denied on the ground that the value of the goods consumed is not indicated in the invoice in the case of Adlabs v. CCE [2006] 4 STT 133 (Bang. - CESTAT) in the above case, this Bench, made the following observations:— "3. On a careful consideration, we notice that the Commissioner was not justified in taking the view, in contra to the Board's letter and the Notification. The appellants have maintained the records of the inputs used in the photography, nowhere it is stated in the Circular and Notification that the inputs used in the photography s....
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....to interpretation of the Notification No. 12/2003-ST which reads as follows:— "General exemption - Exemption to value of goods and materials sold by service provider.—In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient or service, from the service tax leviable thereon under section 66 of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. 2. This notification shall come into force on the 1st day of July, 2003." 5.1 The impugned order seeks to deny the benefit of this notification availed by the appellant during the material period and orders recovery of exemption availed for the failure of the assessee to fulfil the conditions of the notification. We find that the requirement to qualify for the exemption, is that materials are sold in the course of provision of service and the service provider maintains a reco....