TaxTMI 
TaxTMI 
2019 (1) TMI 380
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.... Shipyard Ltd (HSL) and are registered with service tax for the purpose of providing 'Maintenance and Repair Services'. They paid service tax after availing exemption under notification 12/2003-ST for the value of materials used in the Maintenance and Repair Services. During the course of an audit the department noticed the appellants adopted valuation for payment of service tax by wrongly availing benefit of exemption notification 12/2003- ST. The range officer called for details and after receiving the same, he issued show cause notices to the appellant alleging that they have not paid service tax on the gross value received for the services but have taken notional abatement of 60%/70% under notification 12/2003-ST which is not permissible. One of the show cause notices pertaining to appeal ST/30921/2016 is also a demand on account of service tax payable on GTA services. The adjudicating authority confirmed the demands and on appeal, CESTAT had remanded the matter back for denovo adjudication. The present appeals are against the denovo orders. 4. Learned counsel for the appellant submits that the nature of their services are repair and maintenance of ships by replacing old, wo....
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....e 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 property in goods transferred in the execution of a works contract. 25. In fact, by way of contrast, Section 67 post amendment (by the Finance Act, 2006) for the first time prescribes, in cases like the present, where the provision of service is for a consideration which is not ascertainable, to be the....
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....2 to 4 of the gross value of the works contract. 29. It is interesting to note that while introducing the concept of service tax on indivisible works contracts various exclusions are also made such as works contracts in respect of roads, airports, airways transport, bridges, tunnels, and dams. These infrastructure projects have been excluded and continue to be excluded presumably because they are conceived in the national interest. If learned counsel for the revenue were right, each of these excluded works contracts could be taxed under the five sub-heads of Section 65(105) contained in the Finance Act, 1994. For example, a works contract involving the construction of a bridge or dam or tunnel would presumably fall within Section 65(105)(zzd) as a contract which relates to erection, commissioning or installation. It is clear that such contracts were never intended to be the subject matter of service tax. Yet, if learned counsel for the revenue is right, such contracts, not being exempt under the Finance Act, 1994, would fall within its tentacles, which was never the intention of Parliament." 6. He further argued that post 01.06.2007, only some services are covered by Sec.65(1....
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....vil Appeal No.3327 of 2007]. This notification specifically exempts so much of the value of all taxable services as is equal to the value of goods/materials sold by the service provider to the service recipient. In this case the burden of proving that they are entitled to the benefit of this exemption notification rests on the appellant and they have not discharged this burden and have not provided an iota of evidence to show that they have sold any materials/goods to their service recipients. What they have produced is the value of materials which they have purchased. They have neither produced evidence that they have sold materials to their service recipient nor have they produced evidence to the effect that these materials were used in the execution of contracts for which they received consideration. He also contested the arguments made by the learned counsel as follows. 1) It is wrong to say that the adjudicating authority has not considered the submissions made by the appellant. These were examined and the findings were clearly recorded in Paragraphs 10 & 11 of the Order-in- Original No. 34/2014-15 dated 04.02.2015. 2) The appellant is not specific as to how the adjudica....
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....ued before the adjudicating authority nor was considered by him in the impugned orders. Related to this question, exigibility of the services rendered by the appellant post 01.06.2007 in terms of Sec.65(105)(zzzza) of the Finance Act, 1994 this is also an issue which was not examined by the adjudicating authority while passing the impugned orders. Hence, this needs to be examined before the appeal can be considered by this Bench. Coming to the question as to whether the appellant would be eligible for exemption notification 12/2003- ST, we agree with the learned department representative that any exemption notification should be strictly construed. The appellant had produced only documents to show that they have purchased materials but nothing to show that they have used the same in execution of the contracts and it is for this reason the adjudicating authority did not allow the abatement under this notification. During hearing, learned counsel submits that they will be able to produce evidence that the materials have been used in the execution of contracts. We have also considered the argument of the learned Departmental Representative that exigibility of Service Tax is beyond the....