TaxTMI 
TaxTMI 
2017 (6) TMI 164
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....cial or Industrial Construction Service", "Construction of Complex Service" and "Works Contract Service". Certain inquiries were conducted by the officers of the Department in September, 2010 with reference to non-payment of service tax by the appellant/assessee. On completion of the inquiry a show cause notice dated 25.02.2011 was issued to the appellant/assessee to demand service tax not paid/short paid amounting to Rs. 1,08,95,209/-. The case was adjudicated. The Original Authority confirmed the service tax liability of Rs. 79,89,747/- and he also imposed equal amount of penalty under Section 78 of the Finance Act, 1994 and further penalties under Section 76 and 77 of the Act. The Commissioner dropped the demand of Rs. 29,05,462/- mainly with reference to an exclusion of value of free supply materials. The appellant/assessee is in appeal contesting the service tax demand in excess of an amount of Rs. 41,25,343/- already paid by them, before adjudication of the case. The Revenue contested the non-inclusion of free supply materials while calculating the gross value resulting in dropping the demand of Rs. 14,71,869/-. 3. Ld. Counsel for the appellant submitted that the appellants ....
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.... involving supply of materials also. 6. The appellants contested the confirmation of service tax levy of Rs. 54,331/- in respect of construction of yard in the railway terminal. It is claimed that the Original Authority wrongly held that a container yard development is not to be considered as work relating to railways. The ld. Counsel submitted that the term "railway" as defined under Section 2 of the Railways Act is very broad. The siding yard/container yard for transportation of the goods/containers is very much part of the railways. It is the nature of construction, which is essential for consideration and not whether the same is completed through another main contractor. 7. The appellant/assessee contested the disallowance of abatement in taxable value in respect of receipts from M/s. The Learning Education Curve Ltd. The service tax cannot be demanded on the total receipts. Abatement in terms of notification no.1/06-ST is to be considered. 8. Ld. Counsel also contested the demand on the ground of limitation. The period involved is from 1.10.2005 to 31.03.2010 and the show cause notice was issued on 25.02.2011. The service tax liability in respect of composite works contract....
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....rmed the service tax liability without allowing any abatement or composition scheme. He also imposed penalty under Section 76 of the Finance Act, 1994. 10. Ld. Counsel submitted that having admitted that the contract executed by the appellant/assessee are all in the nature of works contract involving supply of materials, the Original Authority should have considered their claim either for composition scheme or for the provisions for Rule 2 A of the Valuation Rules. Under no circumstances, service tax can be levied and collected on the gross value of works contract service. The same will be against the statutory as well as constitutional provisions of taxing works contract. 11. Ld. AR submitted that Revenue is in appeal against order dated 19.03.2013 only to the limited extent of contesting exclusion of value of free supply items, thereby dropping demand for service tax of Rs. 14,71,869/- by the Original Authority. He submitted that the gross value in terms of the Section 67 of the Finance Act read with Rule 3(1) of the Works Contract (Composition Scheme for payment of service tax) Rules 2007, makes it clear that the value for service tax should include all receipts. In the presen....
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....be levied and collected on the whole gross value of works contract service. Such action will be not only against the statutory provisions of Finance Act, 1994 but also against the Constitutional mandate with reference to taxability of works contract service. The Hon'ble Supreme Court examined the scope and leviability of the service tax under works contract service in Larsen & Toubro Ltd.(supra). The admitted legal position is that service tax levy under Finance Act, 1994 can be only with reference to service portion of the works contract service, which is composite in nature involving transfer of goods in property and rendering of service. The Original Authority by denying the composition scheme as well as facility of Rule 2 A of Service Tax (Determination of Value) Rules, 2006, has confirmed the tax liability on the gross value of the contract. We find such confirmation is not legally sustainable. The taxable value for service tax in respect of work contract has to be arrived at by applying the provisions of either composite scheme or Rule 2 A of the Valuation Rules. For this, the appellant /assessee should submit supporting evidences to satisfy the conditions as stipulated by th....