TaxTMI 
TaxTMI 
2018 (10) TMI 402
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....ered into construction agreement with clients for construction of flats and executed sale agreement only on UDS land and not for the total built-up constructed area of the flat and as such there is no total sale involved and the appellants have rendered service of construction of flats to the respective clients. They did not discharge appropriate service tax on the construction activities for which show cause notices were issued proposing to demand service tax under commercial or industrial construction service (construction of residential complex) service along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. In appeal, Commissioner (Appeals) upheld the same. In respect of Appeal No. ST/40336/2013, the appeal is filed against the order passed by the Commissioner (Appeals). Vide the adjudication order, the original authority had not imposed penalty under section 76 against which the department filed appeal before Commissioner (Appeals) and the Commissioner (Appeals) in the impugned order imposed penalty under section 76. Aggrieved, the appellants have filed appeals. The details o....
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....e tax on composite contracts prior to 01.06.2007, as the validity of a levy cannot depend upon the existence of exemption notifications issued by the executive. The said decision of the Hon'ble Supreme Court has been followed in a catena of cases, out of which reliance is placed on the following. Balaji Builders v. CCE, Jaipur reported in 2017 (6) GSTL 59 (Tri-Del) Ircon International Ltd v. CCE, Delhi reported in 2017 (5) GSTL (221) (Tri-Del) 4.3 Hence, the demand upto 31.05.2007 under construction of residential complex service is not at all sustainable and liable to be set aside. 4.4 As only pure service contracts are covered under the definition of Construction of residential complex service, confirmation of the demand under the said service, post 01.06.2017, in respect of the composite contracts undertaken by the appellant is not at all sustainable. In this connection, reliance is placed on the following decisions. Real Value Promoters Ltd. Vs CCE - 2018-TIOL-2867-CESTAT, Chennai. URC Constructions Pvt. Ltd. Vs CCE - 2017 (50) STR 147 Tri-Chennai. 4.5 In view of the above, the demand of service tax confirmed under construction of complex service, for the p....
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....ial 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 which service tax will be levied at only 2 per cent of the total value of the words contract". 7.10 The issue was analyzed by the Hon'ble Apex Court in Larsen & Toubro case (supra) and held that there can be no levy of service tax on composite contracts (involving both service and supply of goods) prior to 1.6.2007. This read together with the budget speech as above would lead to the strong conclusion that composite contracts were brought within the ambit of levy of service tax only with effect from 1.6.2007 by introduction of Section 65(105)(zzzza) i.e. Works Contract Services. As pointed out by the ld. counsels for appellants, there is no c....
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.... 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 or Industrial 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 made under Commercial or Industrial Construction Service under Section 65 (105) (zzq) of the Finance Act, 1994. In such situation, we note that it cannot be a case of simple mentioning of wrong provisions of law as submitted by the Revenue. Apparently, the tax liability of composite works contract is to be considered under works contract services only as per legal position settled by the Hon'ble Apex Court in M/s L&T Limited. Even in the appeal, the Revenue submitted that the respondent were engaged in construction services liable to tax under tax entry Section 65(105) (xxq). The grievance of the Revenue is with reference ....
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....ble 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 contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of properly in goods transferred in the execution of a works contract.' 10. In view of this specific decision and the admitted claim of the appellant that they are not providers of 'commercial or industrial construction service' but of 'works contract service', no tax is l....
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....fore 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 particular, relying on the ratios of the case laws cited supra, we hold as under:- a. The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service in the light of the Hon'ble Supreme Court judgment in Larsen & Toubro (supra) upto 1.6.2007 b. For the period after 1.6.2007, service tax liability under category of 'commercial or industrial construction service' under Section 65(105)(z....