TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 1149
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....rindavan, Sujeet, Surya Skanda, the department was of the view that such payment is not proper for the reason that the services cannot be classified as Works Contract Service and also because appellants have not exercised their option for payment of service tax under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 by intimating the department as required. Accordingly Show Cause Notice No. 351/2008 dated 23.10.2008 was issued inter alia proposing to demand total service tax liability of Rs. 2,06,20,252/- under the category of construction of commercial complexes and residential complex service for the period 1.4.2007 to 31.3.2008 along with interest thereon as under. The show cause notice also proposed penalties under sections 76 and 78 of the Finance Act, 1994. Name of the Project Allegation Tax liability Commercial PRGT Non-payment of service tax on the services provided to buyers Rs.34,38,337/- Residential The Lords Sananda Brindavan Sujeet Surya Skanda Non-payment of service tax on the services provided to buyers Rs.1,07,33,392/- Commercial PRGT Amarasri Non-payment of service tax on the services provided to land owners 48,98,579/- Residen....
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....e to pay under either RCS or WCS. 2.4 M/s. Ceebros Property Development is the appellant in ST/350/2010. The demand is for the period from 1.7.2007 to 28.2.2008. It was put forward by the ld. consultant that the appellant Ceebros Property Development has been discharging service tax under WCS post 1.6.2007 @ 2.06% under the composition scheme. The demand has been raised alleging that since the appellant was discharging service tax under construction of complex service prior to 1.6.2007, they have to continue with the same classification post 1.6.2007 and cannot change the classification to works contract service and pay service tax under composition scheme. Further, that since appellant had not intimated the department about exercising the option to pay service tax under the compositions scheme, they cannot do so. He relied upon the decision in the case of Vasihno Associated vide Final Order No. 50871/2018 dated 6.3.2018 to argue that the non-intimation to the department is only a procedural lapse and that the same may be condoned. 3. Today, when the matter came up for hearing, ld. counsel Shri G. Natarajan, appeared for Real Value Promoters Pvt. Ltd. and took us to the history o....
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....overed under CICS and CCS from the date of introduction of service tax levy on such services was, being litigated upon which was finally settled by the Hon'ble Supreme Court in the case of CCE Vs. Larsen & Toubro Ltd. 2015 (39) STR 913 SC. The Apex Court has observed that in as much as section 67 of the Act, dealing with valuation of taxable services, refers to the gross amount charged for service, the services of CICS and CCS would cover only pure service activities, as any contrary view would imply that the Union Government can levy service tax on the gross amount, including the value of transfer of property in goods also, which is constitutionally impermissible. The exemption notifications issued at the discretion of the executive are not sufficient to sustain the levy. The Hon'ble Apex Court has also observed that only with the introduction of WCS as a separate taxable service, statutory mechanism to exclude the value of transfer of property in goods has been prescribed. 3.6 The effect of the above decision is that CICS and CCS, as defined under clauses (zzq) and (zzzh), respectively, of sub section (105) of the section 65 would cover only pure service contracts, with....
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....S for the period post 01.06.2007 have been set aside. a) URC Constructions Vs CCE - 2017 (50) STR 147 Tri-Chennai b) Mantri Developers VS CCE - 2014 (36) STR 944 Tri-Bang. c) Skyway Infra Projects VS CST - 2018-TIOL-360-CESTAT-MUM d) Srishti Constructions VS CCE - 2018-TIOL-337-CESTAT-CHD e) CST VS Swadeshi Construction Company - 2018-TIOL-1096-CESTAT-DEL f) Logos Construction Pvt. Ltd. VS CST 2018 (6) TMI 1361 - CESTAT CHENNAI 3.11 In the subject appeal, all the demands confirmed are in respect of composite contracts (commercial buildings, residential buildings, service provided to buyers and service provided to landowners). If the plea that such demands under CICS and CCS for the period both prior to and post 01.06.2007 is not sustainable is upheld, there is no need to advance any further arguments specific to the projects in question. 4. The above arguments advanced by the ld. counsel Shri Natarajan was adopted by ld. counsel Shri Raghavan Ramabhadran and ld. consultant Shri Ramachandra Rao. 5. On the other hand, the ld. AR Shri A. Cletus has made oral and written submissions, which can be broadly summarized as under:- 5.1 That even prior to 1.6.2007 from which d....
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....rily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams' 7.2 Construction of Complex Service (CCS), defined under section 65(30a) ibid during the period of dispute as under:- 'construction of complex' means - (a) construction of a new residential complex or a part thereof; or (b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or (c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex;' 7.3 "Residential Complex" was defined in section 65(91a) ibid during the disputed period as under:- 'residential complex' means any complex comprising of - (i) a building or buildings, having more than twelve resi....
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....ation, 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' 7.5 There was considerable litigation on the issue whether service tax can be levied on indivisible works contract prior to its introduction from 1.6.2007 which was finally settled by the Hon'ble Apex Court in the case of Commissioner of Central Excise Vs. Larsen & Toubro Ltd. reported in 2015 (39) STR 390 (SC). The Hon'ble Apex Court held that the taxable services of 'consulting engineer' under section 65(105)(g) of the Finance Act; erection, 'commission and installation services' under section 65(105)(zzd) of the said Act; 'technical testing and analysis' under section 65(105)(zzh) ibid; 'construction services' under section 65(105)(zzq); construction of complex services under section 65(105)(zzzh) would refer only to service contracts simpliciter and not to composite works contracts; that these five taxable services only would qualify without any other element. The Hon'ble Supreme Court also observed that with introduction of works contract serv....
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....to be in the nature of composite works contract services and hence even after 1.6.2007 for the periods disputed in these appeals they cannot be brought within the fold of commercial or industrial construction service or construction of complex service as proposed in the show cause notices and confirmed in the impugned orders. 7.8 On the contrary, being composite works contracts, they will necessarily fall within the ambit of works contract service as defined under section 65(105)(zzzza) ibid. It is possibly with this intent in mind that the lawmakers have included in the definition of works contract, erection and commissioning service, commercial or industrial construction service, construction of complex service and in addition turnkey projects including EPC projects within the definition of Works Contract Service. 7.9 At this juncture, it is worthwhile to reproduce excerpts from the Union Finance Minister's budget speech in 2007:- 'State Governments levy a tax on the transfer of property in goods involved in the execution of a works contract. The value of services in a works contract should attract service tax. Hence, I propose to an optional composition scheme under whic....
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...., it would be the appropriate classification for the part of the service provided after that date.' 7.12 Thus, for example, while construction of a new residential complex as a service simpliciter would find a place under section 65(105)(30b) of the Act, the same activity as a composite works contract will require to be brought under section 65(105)(zzzza) Explanation (c). For both these categories for the definition of residential complex, the definition given in section 65(105)(91a) will have to be adopted as discussed above will have to be taken into account. 7.13 We find sustenance in arriving at this conclusion by a number of decisions of the Tribunal in which it has held as under:- a. In the case of Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company - 2018-TIOL-1096-CESTAT-DEL, the Tribunal in para 7 has held as under:- '7. We note that in the present case, the SCN was issued on 27.05.2011. On that date, both the tax entries, namely, Commercial orIndustrial Construction Service and Works Contract Service, were available in the Finance Act, 1994. The SCN did mention this in the first para itself. However, the proposal for tax demand was specifically m....
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.... the adjudicating authority is liable to be set aside and we do so.' c. In the case of URC Construction (P) Ltd. Vs. Commissioner of Central Excise, Salem - 2017 (50) STR 147, the Tribunal in paragraphs 9, 10 and 11 has held as under:- '9. The Hon'ble Supreme Court in re Larsen & Toubro & Ors. has decided thus '24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines 'taxable service' as 'any service provided'. All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service c....
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....The demand confirmed in the impugned order under these categories namely under construction service for the period 10.09.2004 to 16.06.2005 under CICS for the period 16.06.2005 to 30.09.2008 cannot also sustain and are therefore set aside. So ordered 5.3 For the period 01.04.2008 to 30.09.2008, the demand confirmed is Rs. 26,88,611/-. We note that the appellant has not contested the liability under works contract for this period. The only argument brought forth by the Ld. Counsel is that they have discharged an amount of around Rs. 82 lakhs under this category after the visit of the departmental officers and therefore an amount of Rs. 36,88,611/- demanded in the impugned order should be considered as having been discharged. We find merit in his argument and hence the demand of Rs. 26,88,611/- under works contract service for the period 01.04.2008 to 30.09.2008 is required to be considered as having been paid, albeit subsequent to the visit of the officers. However, the interest liability if any that arise on this amount if not paid already will have to be discharged by the appellants. So ordered.' 8. In the light of the discussions, findings and conclusions above and in particul....