TaxTMI 
TaxTMI 
2011 (5) TMI 399
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.... M/s. Sri Avantika Contractors ('SAC', in short) challenging demand of Service Tax of Rs. 3,24,18,125 (Rupees Three Crores Twenty Four Lakhs Eighteen Thousand One Hundred and Twenty Five only) along with interest and imposition of penalties under various sections. 1.4 The three Appeals arise out of common order of the original authority and the facts are inter-linked and therefore they are disposed of by this common order. 1.5 Heard Shri Akhil Gupta, Chartered Accountant on behalf of NBCC, Shri Rajesh Kr. T.R., Chartered Accountant on behalf of APR & Shri J.P. Khaitan, Sr. Advocate on behalf of SAC. Heard learned Consultant Shri D.K. Achariya on behalf of the Department. 2.1 Relevant facts in brief are that NBCC entered into contract with M/s. NTPC in January, 2004 to undertake (site preparation, site levelling works in connection with setting up of a super Thermal Projects by M/s. NTPC. The contract was for Rs. 118.00 crores and there was provision for price escalation as well. NBCC in turn entered into contracts with APR and SAC for undertaking the actual work of site levelling, site formation etc. and paid a sum of Rs. 31.00 crores approx. to SAC and a sum of Rs. 61.00 crores....
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....es Eighty Two Crores Sixty Nine Lakhs Thirty Five Thousand Seven Hundred and Ninety One only) relating to the period from 16-6-2005 to 31-3-2007. Even though they have made a claim before the Commissioner that the value of services rendered prior to 16-6-2005 is around Rs. 78 crores he has not recorded a finding on this claim. Therefore the demand of Service Tax on site formation relating to this period is highly inflated. The finding of the Commissioner that NBCC, APRC and SAC have not contested the figure of payments which were incorporated in Annexure BB of the Show Cause Notice is factually incorrect in the light of their submissions made about the actual payments received by them both during period tax when was leviable and for period when tax was not leviable. 3.2 The work in pursuance of the contract entered into by them with M/s. NTPC has been got done by sub-contracting the work to APR and SAC. They have undertaken the overall responsibility to get the work done as per the specifications given by M/s. NTPC and for this purpose they have ensured necessary supervision over the work undertaken by the sub-contractors. The sub-contractors have no direct contact with M/s. NTPC.....
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....re also to be taxed separately and the services rendered by the sub-contractors should be treated as input services to the main contractor and the main contractor shall be eligible for service tax. Thus, even if service tax demand is to be sustained on the sub-contractors, the same amount was available as credit to NBCC. They also submit that the tax demand based on actual receipt of service charges during the period 10-9-2004 to 31-3-2007 has been wrongly made as part of the realization relates to the services undertaken by them for the period prior to 10-9-2004. They also submit that since NBCC has paid Service Tax under the category of site formation services with effect from 16-6-2005, the question of demanding on the very same activities from the sub-contractors under a different category as business auxiliary service does not arise. 4.2 It was thus submitted that the sub-contractors have not rendered any direct services to M/s. NTPC. They have not received any payments from M/s. NTPC directly. NBCC is only responsible to M/s. NTPC for quality of work and for fulfilment of terms of contract entered into between the two. The finding of the Commissioner that they, the sub-cont....
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....ices and the Show Cause Notice having described the nature of activities undertaken by them, the quoting of a wrong service head cannot be held to be fatal to the demand of Service Tax. 5.4 Regarding Service Tax demand on NBCC under the head 'Business auxiliary services', he reiterates the findings and reasoning of the Commissioner. 5.5 Regarding the claims of discrepancies in the quantum of demands made on behalf of the Appellants, he refers our attention to the clear finding of the Commissioner that the appellants have not contested the figures of payments which were incorporated in Annexure BB of the Show Cause Notice. 6.1 We have carefully considered the submissions made from both the sides and perused the records. 6.2 We find that the actual work relating to which demands of Service Tax have been raised against the three appellants were done for M/s. NTPC. M/s. NTPC has entered into contract only with NBCC. NBCC has in turn entered with contracts with the other two sub-contractors. The entire contract amount between M/s. NTPC and NBCC was to the tune of Rs. 118 crores and out of which it is claimed that work of laying Roads amounting to about Rs. 14 crores has not been und....
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....cannot be treated as consideration notionally received back from the sub-contractors. Therefore demand of Service Tax holding that NBCC has rendered business auxiliary services to the sub-contractors cannot be sustained. 8.1 Commissioner has also held that the sub-contractors have rendered services to M/s. NTPC on behalf of NBCC. Undisputedly, the sub-contractors had no agreements with M/s NTPC. They had agreements only with NBCC. The definition of business auxiliary services reads as under:- "2(19) "business auxiliary service" means any service in relation to,- (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or Explanation : For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of, the client; (vi) provisio....