TaxTMI 
TaxTMI 
2019 (4) TMI 937
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....ifications dated 10 September, 2004, 7 June, 2005 and 1 March, 2006 for payment of service tax under "Commercial Services". For discharging the service tax under "Works Contract Services", the appellant availed the benefit of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. Four show cause notices were issued to the appellant. 3. It needs to be stated that the computation of demand in regard to the first show cause notice dated 21 April, 2009 is as follows: Computation of Demand as per SCN A. Demand under Commercial or Industrial Construction Services or Construction of Complex Services Period Abatement Claimed Rate of Service Tax Service Tax (Incl. Cess) Sept. 04 to Mar. 05 10,06,74,224 10.20% 1,02,68,770 Apr 05 to Mar 06 28,46,31,509 10.20% 2,90,32,414 Apr 06 to Mar 07 60,08,71,661 12.24% 7,35,46,691 Apr 07 to Mar 08 17,04,85,038 12.36% 2,10,71,951 Total (A) 1,15,66,62,432 13,39,19,826 *Abatement was denied on the ground that cost of free material was included in the gross value of services and CENVAT Credit was availed on Input Services B. Demand under Works C....
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....r Best Judgment Assessment under S.72 of the Finance Act, 1994 (125% of the preceding Financial Year i.e. 2008-09 assuming there has been 25% growth) 6. The computation of demand as per the fourth show cause notice dated 19 June, 2012 is as follows: Computation of Demand as per Show Cause notice. Period CENVAT Credit denied April, 2010 to March, 2011 30,53,514 7. As noted above, the four show cause notices covered the period from 1 September, 2004 to 31 April, 2011 and proposed Service Tax liability amounting to Rs. 27,30,12,936/- under "Commercial or Industrial Construction Services" and "Construction of Complex Services" by invoking Section 73 of the Finance Act, 1994 with interest under Section 75 and penalty under Sections 76, 77 and 78 of the Finance Act. FIRST AND SECOND SHOW CAUSE NOTICE 8. The first and the second show cause notices can be taken up together as they have also been considered together by the learned Commissioner. 9. In regard to the first two show cause notices dated 21 April, 2009 and 20 January, 2010, the benefit of abatement has been denied for the reason that the appellant did not include the cost of free material supplied to....
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....of service tax, it had wrongly availed the benefit of the abatement notifications. 12. This finding of the Commissioner runs contrary to the decision of the Supreme Court in the case of Bhayana Builders (P) Limited. The Supreme Court observed that the value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient and such a value has no bearing on the value of services provided by the service recipient. The relevant paragraphs 15 and 16 which deals the issue are as under: "15. It was argued that payment received in 'any form' and 'any amount credited or debited, as the case may be...' is to be included for the purposes of arriving at gross amount charges and is leviable to pay service tax. On that basis, it was sought to argue that the value of goods/materials supplied free is a form of payment and, therefore, should be added. We fail to understand the logic behind the aforesaid argument. A plain reading of Explanation (c) which makes the 'gross amount charges' inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credi....
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....could not have denied the benefit of abatement merely for the reason that the appellant had not included the cost of free material supplied to the appellant in the gross value of services. 14. The second finding recorded by the Commissioner is that the appellant should have discharged service tax @ 4.12% since this was the rate of tax when the payment was received and not 2.06%. This finding cannot also be sustained. The taxable event in relation to service tax is rendering of service and thus tax has to be levied at the rate prevailing during the period such service was provided and not the rate of tax that was prevailing at the time of the payment. This is what was held by the Delhi High Court in Vistar Construction (P) Ltd., in paragraph 8 and it is reproduced as under: "8. Therefore, the taxable event, in so far as service tax is concerned, is the rendition of the service. That being the position, the taxable events in the present writ petition had admittedly occurred prior to 1.3.2008. At that point of time the rate of service tax applicable in respect of the services in question was 2% and not 4%, which came into effect only on or after 1.3.2008. In both the writ petiti....
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....early held that the Service Tax was levied on service and that it was not a tax on materials or sale. The taxable event was the rendition of the service. Consequently, this Court held that the rendition of the service had been completed prior to 1-3-2008 and, therefore, the taxable event had occurred prior to 1-3-2008. Consequently, the applicable rate of tax would be the rate which was prevalent prior to 1-3-2008. Since the entire foundation of the argument of the revenue is based on the instruction dated 28-4-2008 which has been found to be invalid by virtue of our decision in the case of Vistar Construction (supra), the present appeal is also liable to be dismissed." 16. Thus, for the reasons stated above, the demand confirmed by the Commissioner in the first two show cause notices deserves to be set aside. THIRD SHOW CAUSE NOTICE 17. The third show cause notice dated 20 October, 2010 deals with demand of service tax proposed on the differential value calculated on comparing the gross amount as per the balance sheet and the gross amount as per ST-3 Returns. 18. With regard to this demand, the learned Commissioner has recorded the following finding: "19.4 The party....
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.... credit taken and utilised. The finding recorded by the Commissioner is as follows: "20.3 The notice has striked off the column 5B of ST-3 which is prescribed for providing the details in respect of opening balance of Cenvat credit, Cenvat credit taken, Cenvat credit utilised and closing balance of the Cenvat credit. Further, the notice did not provide any details regarding the same. The burden of proof regarding the admissibility of the CENVAT credit lie upon the manufacturer or provider of output service taking such credit. In absence of any clarification from the notice, it appears that they had wrongly paid their service tax liability including cesses of Rs. 30,53,514/- (as per ST-3 returns) through Cenvat Credit during the period April, 2010 to September, 2010 and October, 2010 to March, 2011, which is recoverable from the noticee under Section 73(1) of the Act ibid." 22. The contention of the learned Counsel for the appellant is that the appellant had struck off the column 5B by mistake but at the same time had also enclosed details of service tax for the period from 1 April, 2010 to 31 March, 2011 in the ST return which mentioned "less cenvat" and, therefore, the Commi....