TaxTMI 
TaxTMI 
2018 (10) TMI 1191
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....on Scheme for Payment of Service Tax) Rules 2007. The department entertained the view that service tax is to be paid under commercial construction service from June 2006 onwards. Show cause notices were issued proposing to demand the service tax along with interest on both these projects and after due process of law, the original authority confirmed demand of service tax of Rs. 4,65,83,796/- along with interest and imposed equal penalty under section 78 of the Finance Act, 1994. Aggrieved, the appellants are before the Tribunal. 2. The ld. counsel Shri Raghavan Ramabhadran appeared and argued the matter on behalf of the appellant. He submitted that the dispute relates to two projects namely Swarup Heritage and Jayanth Tech Park project. The period involved in Swarup Heritage is May 2006 to March 2008 and that of Jayanth Tech Park is entirely after 1.6.2007. He explained that the actual construction in respect of Jayanth Tech Park commenced from August 2007 only. The appellant submits that out of 65% USD acquired by them, sale deeds and builder's agreements were executed in favour of MRR Reddy (16.49%), Kalpataru Finance (16.49%) and Vishranthi Reality Services (32.03%). In respe....
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.... 2,27,65,233 2,10,00,697 Total 2,55,83,099 2,10,00,697 4,65,83,796 2.2 In respect of Swarup Heritage also, the very same argument was put forward by the ld. counsel for the appellant who submitted that the demand cannot sustain for the reason that the department has demanded the service tax under construction of commercial or industrial complex service. Further, the demand in respect of both the projects are wholly time-barred. 3. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. 4. Heard both sides. 5. As narrated above, the facts would reveal that the demand prior to 1.6.2007 cannot sustain as per the decision of Larsen & Toubro Ltd. (supra). After 1.6.2007, the appellants have discharged the service tax under works contract services under the composition scheme. The department has taken the view that the appellants have to discharge service tax under construction of residential complex service for Swarup Heritage and under commercial or industrial construction service in the case of Jayant Tech Park. The Tribunal in the case of Real Value Promoters Pvt. Ltd. (supra) has conside....
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.... new service 'Works Contract service' was made effective, classification of aforesaid services would undergo a change in case of long term contracts even though part of the service was classified under the respective taxable service prior to 1-6-2007. This is because 'works contract' describes the nature of the activity more specifically and, therefore, as per the provisions of Section 65A of the Finance Act, 1994, 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. ....
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....ontracts executed by the appellant are nothing but works contracts, for the period in question, entire case of the Revenue in the show-cause notice stands demolished by the Apex Court in the case of Larsen & Toubro Ltd. (supra). In the said judgment, their Lordships have very categorically laid down the law that the works contract cannot be vivisected for the confirmation of demand under various other services. On this ground itself, the entire demand confirmed by 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 serv....
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....sen & Toubro Ltd., (supra), relied upon by the Ld. Counsel. So ordered. 5.2 The Ld. Counsel has been at pains to point out that on-going projects which were only in the nature of works contract prior to 01.04.2007 cannot be brought under different category of Construction Services and CICS subsequently. We find merit in his arguments. The SCN has proposed demand of service tax liability only under these two categories and not under Works Contract service. 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 ....