TaxTMI 
TaxTMI 
2014 (4) TMI 174
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....f Service Tax) Rules, 2007 on those contracts which were executed on or before 01.06.2007. Investigations undertaken by DGCEI revealed that appellant was classifying the services rendered for 34 ongoing contracts under 'Commercial or Industrial Construction Services' and 'Construction of Complex Services' and was also paying service tax before 01.6.2007. Appellant reclassified the services of ongoing contracts under 'Work Contract Services' with effect from 01.6.2007 under composition scheme by paying service tax at concessional rate of 2% on introduction of Works Contract Services. It was also proposed that value of free supply materials was required to be added to the gross amount while discharging Service Tax liability on these ongoing contracts under construction services as per Section 67 of the Finance Act, 1994 as 'Gross Amount Charged'. A show cause notice dated 22.10.2008 was issued by DGCEI, Ahmedabad demanding Service Tax of Rs. 7,07,31,967/- for the period 01.6.2007 to 31.07.2008. A corrigendum dated 29.09.2009 to the earlier show cause notice dated 22.10.2008 was issued to the appellant revising the service tax amount to Rs. 7,24,13,848/-. By an addendum dated 14.12.20....
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....ontract Rules, 2007. It was the case of the appellant that by changing the classification of services and denying the benefit of Notification No. 1/2006-ST dated 01.3.2006, Adjudicating authority has gone beyond the scope of show cause notice dated 22.10.2008. 3.1 That without prejudice no service tax can be levied on the value of goods sold by the appellants in the execution of contracts. That it is settled law that service tax can be levied only on the value of services and not goods sold which providing a contractual service. That the judgment of Delhi High Court in the case G.D. Builders vs. UOI [2013 (32) STR 673 (Del.)] relied upon by the Revenue clearly hold that Composite Contracts can be vivisected and only service portion can be taxed for service tax purposes. That even now also appellant is ready to reverse cenvat credit to avail benefit of Notification No. 1/2006-ST dated 01.3.2006. 4. Shri K.M. Mondal, (Special Consultant) appearing on behalf of the Revenue argued the following during the course of hearing as well as through the written submissions made:- (i) That second show cause notice dated 23.10.2009 was is....
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....2007 and as Works Contract under clause (zzzza) from 01.7.2007 does not have any bearing on the eligibility of the appellant to composition scheme under 2007 Rules. (vi) That as per Apex Court's judgment in the case of Nagarjuna Construction Company Limited vs. GOI [2012 (28) STR 561 (SC)] also composition scheme is not available to these assessees who were paying service tax before 01.7.2007 and that there is no discrimination while implementing circular dated 24.8.2010 issued by CBEC. (vii) That perception of the appellant that Revenue has attempted to change the classification of the service by way of addendum dated 14.12.2009 is wrong and that the same cannot be considered as a new and different ground than what was taken in the original show cause notice dated 22.10.2008. (viii) That in view of CESTATs judgment in the case of Instrumentation Limited vs. CCE Jaipur [2011 (23) STR 221 (Tri.)] following the principles of harmonious construction, it can be said that Works Contract Service under Section 65 (105) (zzzza) would also cover the serv....
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....Works Contract Services' with effect from 01.6.2007 for the 34 ongoing contracts. Findings of the Adjudicating authority are encouraged by the clarification issued by CBEC vide Reference Code 09703/4-1-08 of F. No. 345/6/2007-TRU dated 04.01.2008 (Circular No. 98/1/2008-ST) according to which vivisection of a single Composite Service and classifying the same under two different taxable services, depending upon the time of receipt of consideration, is not sustainable. However learned Adjudicating authority failed to appreciate another clarification issued under Circular No. 128/10/2010-ST dated 24.08.2010 where the following was clarified by CBEC in Para 2:- It has been brought to the notice of the Board that the following confusions/disputes prevail with respect to long term works contracts which were entered into prior to 1-6-2007 (when the taxable service, namely, Works contract came into effect) and were continued beyond that date : (i) While prior to the said date services like Construction; Erection, commissioning or installation; Repair services were classifiable under respective taxable services even if....
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....was not entitled to revise the classification to 'Works Contract Services'. The first show cause notice dated 22.10.2008 and its corrigendum dated 29.09.2009, were mainly targeted to deny the benefit of Composition Scheme to the appellant and to determine the taxable value as per Rule 2A of the Service Tax (Determination of Value) Rules, 2006 read with section 67 of the Finance Act, 1994. The provisions of Rule 2A and Composition Scheme deal only with the Works Contract Service under Section 65 (105) (zzzza). There was thus no doubt in the authority issuing show cause notice dated 22.10.2008 and its corrigendum dated 29.09.2009 that the classification of the services being dealt was 'Works Contract Services' with effect from 01.7.2006. This fact was confirmed by CBEC by issuing circular dated 24.08.2010. Therefore, demanding a duty of Rs. 20,53,91.319 on 'Commercial or Industrial Construction Services'/ 'Construction of Complex Services' and denying the benefit of Notification No. 1/2006-ST dated 01.3.2006 is totally a new and different ground than what was being taken in the original show cause notice dated 22.10.2008, where classification of the service provided was not doubted a....