TaxTMI 
TaxTMI 
2012 (11) TMI 494
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....629/- has been confirmed on the ground that the appellants did not include the value of site material used in providing erection, installation & commissioning services/commercial or industrial construction services and works contract services. Further, Service Tax of Rs.13,58,74,780/- has been demanded on the ground that the appellant is not entitled to avail the benefit of Notification No.1/2006-ST, as the appellant had violated the condition of the notification by availing credit of Service Tax paid on input service and an amount of Rs.56,95,397/- has been demanded as Service Tax under the category of Good Transport Agency (GTA) services on the ground that the appellant utilized the CENVAT Credit balance for payment of Service Tax on GTA services wrongly. Penalty equal to the Service Tax has also been imposed. Further, interest has also been demanded. 3. Ld.Sr.Advocate on behalf of the appellant submitted that the appellants were actually providing the works contract service and therefore the demand for Service Tax on the ground of under-valuation of different services cannot be sustained in view of the several decisions, wherein a view has been taken that the works contract s....
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.... other services provided by the appellant were liable to Service Tax. 5. We have considered the submissions made by both sides. The first submission made by the ld. Sr. Advocate was that even though the appellant had paid Service Tax under the different heads of service prior to 01.06.2007, the fact remains that the service provided by the appellant was works contract service and if the, appellant paid Service Tax because of ignorance or by wrong understanding of law, they cannot be held liable for under-valuation and consequential differential Service Tax liability. 6. The decisions relied upon by ld. Sr. Advocate are discussed. In the case of Turbotech Precision Engineering - 2010 (18) STR 545 (Kar.), the issue before Hon'ble High Court was whether the service provided was classifiable under the head Consulting Engineers service or Works Contract. In Para 8, 9 and 10 observed as follows. "8, From the combined reading of the definition of Consulting engineer prior to 2006 and after 2006, it is clear to the Court that the service rendered by the Company had not been included under the definition of consulting engineer prior to 2006 as it stood under Sect....
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....es of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, aleration, renovation or restoration of, or similar services, in relation to (b) and (c); or. (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects. 10. This section has come into force with effect from 1-6-2007. After considering the contract entered into between the assessee and its employer, the case of the assessee falls under Section 65(105)(zzzza) Explanation (a) and (e). Even though the assessee's case falls under the definition of works contract, but the revenue has no power to call upon the assessee to pay service tax, interest and penalty therein since the provisions of law has come into force with effect from 1-6-2007." 7. From the above, it can be seen that the Hon'ble High Court clearly held that the appellant was not liable for Service Tax unde....
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....liance has been placed on judgment of Hon'ble Bombay High Court in case of Indian National Shipowner's Association (supra) and of Karnataka High Court in the case of V/s Turbotech Precision Engineering Pvt. Ltd. After carefully considering the submissions from both the sides on this plea, we are of the view that the same is not correct in view of the following : (1) Sec. 65(105)(zzzza) introduced w.e.f. 1-6-07 defines taxable service in relation to execution of a work contract - as "any service provided or to be provided, to any person, by any other person in relation to the execution of a works contract, excluding work contract in respect of roads, airports, railways, transport terminal, bridges, tunnels and dams". As per the explanation to Section 65(105)(zzzza), for the purpose of this sub clause, 'work contract' means a contract wherein - (i) transfer of property in goods involved in execution of such contract is leviable to tax as sale of goods; and (ii) such contract is for the purposes of car....
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.... types of contracts mentioned in Explanation to Section 65(105)(zzzza). On comparing the definition of "works contract" as given in Explanation to Section 65(105)(zzzza), with the definitions of (a) 'erection, commissioning or installation service' as given in Section 65(105)(zzd), read with Section 65(29) and Section 65(39a); (b) "Commercial or industrial construction service", as given in Section 65(105)(zzq) read with Section 65(25b), and (c) "Residential Construction Service" as given in Section 65(105)(zzzh) read with Section 65(30a) & 65(91a), it will be seen that the "works contract", defined in Explanation to Section 65(105)(zzzza) is nothing but contract for erection, commissioning or installation service as defined in Section 65(105)(zzd) read with Section 65(29) and Section 65(39a), or "Commercial or industrial construction Service", as defined in Section 65(105)(zzq) read with Section 65(25b)) or "Residential Construction Service" as defined in Section 65(105)(zzzh) read with Section 65(30a) and 65(91a) or contracts for "Turnkey projects including engineering procurement and construction or commissioning (EPC Project)", which involve transfer of property in goods in exe....
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.... service and service tax on the same will be chargeable on the gross amount charged for the service, even if on the supply of food and beverages, sales tax has been charged by the State Government by treating the same as sale under Article 366(29A)(f) of the Constitution. (2) The entry "Service in relation to execution of work contract" as defined in Section 65(105)(zzzza) is different from services defined in other sub-clauses of Section 65(105). In fact, as discussed above, Section 65(105)(zzzza) read with Rule 2A of Service Tax (Determination of Value) Rules, 2006 and Work Contract (Composite Schemes for Payment of Service Tax) Rules, 2007 only provide a new machinery provision for assessment of service tax on "Erection, Installation or Commissioning Contracts", "Commercial or industrial construction contracts", "Residential Construction Service Contracts" and "EPC Contracts" involving transfer of property in goods on which sales tax/VAT is chargeable. But it does not mean that these contracts were not liable to Service Tax prior to 1-6-07 as, as discussed above, "erection, installation or commissioning services", "commercial or industrial construction serv....
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....gh Court in case of Turbotech Precisions Engineering P. Ltd. (supra) since this judgment does not discuss as to how prior to 1-6-07, the type of contracts ' mentioned in Explanation to Section 65(105)(zzzza) were hot taxable under Section 65(105)(zzd), 65(105)(zzq) or 65(105)(zzzh), the same is not a binding precedent. (3) Tribunal in case of Sunil Hi-Tech Engineers Ltd. v. CCE, Nagpur (para 5 of the judgment), reported in 2010 (17) S.T.R. 121 has held that construction service was taxable even during period prior to 1-6-07, the date from which Section 65(105)(zzzza) regarding 'work's contract service' was introduced." 9. This decision has considered several decisions rendered on the subject and has considered statutory provisions in detail, the definitions of services and has come to the conclusion. All the decisions cited by the ld.Counsel are related to the period prior to this decision and decisions, even if subsequent had not considered these decisions in their order, Prima facie, we are convinced that the decision in the case of Instrumentation Limited would be applicable. This is more so in case of the appellant since it was never the case of the app....
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....only and cannot be applied for the earlier period. 12. As regards under-valuation, we find that the appellant had separately collected the amount in the cost of wind energy converter as site material which was in reality required for various services rendered for installation of wind mills. Because of this, there was under valuation of services such as electrical work, civil work, D.P. structure, metering etc. Moreover, we also find that what was used to supply 4 items to sub-contractors for use in construction of foundation and the same were mentioned in the purchase order as free issue material by M/s Enercon. The items are foundation studs along with nuts and washers, anchor ring, grouting frames, cement etc. These were shown as site material and charged as cost of wind energy converter, Prima facie, we are convinced that these items cannot be considered as part of the wind energy converter and therefore inclusion of cost of these materials in the wind energy converter was wrong and showing them as free supply was also wrong. 13. Having availed CENVAT Credit on input/input service, the appellant could not have taken the benefit of abatement. Therefore, prima facie, that ch....