TaxTMI 
TaxTMI 
2019 (11) TMI 675
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Section 65(105), taxable service includes the services 'to be provided' and hence the service tax had to be paid on the advances also. Thirdly, it was also found that the appellant had paid some amounts towards "goods transport agency" service on which they were supposed to discharge the service tax liability under reverse charge mechanism which they have not done. Accordingly, a show cause notice was issued calling upon the appellants to explain:- (a) Why an amount of Rs. 1,07,12,000/- should not be demanded as Service Tax from them under "Erection, Commissioning or Installation Services". (b) An amount of Rs. 27,63,20,528/- should not be demanded from them as Service Tax under "Works Contract Service" (c) An amount of Rs. 96,79,347/- should not be demanded from them as Service Tax under "Site Formation & Clearance Service" . (d) An amount of Rs. 5,94,425/- should not be demanded from them as Service Tax under "Transport of Goods by Road service" under Reverse Charge Mechanism. (e) An amount of Rs. 81,39,131/- of irregularly availed CENVAT Credit should not be recovered from them under Section 73 of Finance Act, 1994 read with Rule 14 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontract for transfer of goods. Therefore, the entire contract is in the nature of "Works Contract Service". Works Contract Service, as has been held by the Hon'ble Apex Court in the case of Larsen & Toubro Limited [2015(39)S.T.R. 913 (S.C.)] is a separate specie of contract as known in the commerce and it cannot be equated either with a contract for supply of goods or a contract for provision of service simpliciter. Therefore the Hon'ble Supreme Court held that the charge for works contracts comes only w.e.f. 01.06.2007 when "Works Contract Service" has been inserted in Section 65(105). Prior to this date, it was not chargeable at all. Although the present period is post 01.06.2007, the charge on this account can only be done under the Works Contract Service, it cannot be done under some other heading. Merely because the works contract service has been made a taxable category post 01.06.2007, it does not automatically mean that it can also be charged under any other head after this date. It is a well settled principle that if a service is taxable under one or more categories, the appropriate category as per law has to be selected. As far as the composite work service is concerned, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under Reverse Charge Mechanism lies on their suppliers and not on them. He further argued that the vehicle owners are operators who merely hire the vehicles and do not issue any consignment note and do not get covered by the Goods Transport Agency Service also. As far as the interest on service tax liability on the mobilization advances received by them is concerned, he would submit that these are in the nature of mobilization advances and not in the nature of advance payment for the services. He would submit that the distinction between the two is when they get mobilization advance they have to either pay interest on the mobilization advance or submit a bank guarantee which is not done in advance payments. In their case, they have submitted a bank guarantee and interest was also charged by their customers and therefore this is nothing but a sort of loan given to them and not the payment made in advance for the services rendered. The amount was thereafter adjusted at the time of final settlement of bills and the service tax was duly paid. The case of the Revenue is that the appellant should have discharged the service tax as soon as they receive mobilization advances on the ground ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on record that they have availed the services of Goods Transport Agency and paid the amount for the services. This amount was not disclosed in their returns but was discovered from their books of accounts. The appellant paid part of service tax and declined to pay rest of it on the ground that the amount was paid by them to their suppliers who had availed the GTA services and not to any Goods Transport Agency itself. However, they have not produced any documents to substantiate this assertion and therefore the demand was confirmed on this ground. 11. As far as the interest payable on mobilization advances is concerned, he would assert that the appellant has received the payment for the services in advance and had not discharged the service tax liability on that date and therefore the interest on delay payment of service tax is correctly demanded. 12. On the question of limitation of time, he would assert that the appellant had not disclosed these details in their ST-3 returns and the matter came to light only when the department had conducted investigation. 13. We have considered the arguments on both sides to decide the issues. As far as the demand on the project for cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tems from running bills. Reconciliation statement have to be attached with the running bills duly certified by site-incharge of M/s Coastal Projects Pvt. Ltd. 11. Period of completion is the essence of contract. The total work shall be completed before 28.02.2011 positively in full shape. Commissioning of major equipment like control panel, FPBs etc. to be completed immediately after their arrival at site. 12. In case if there is any delay in route approvals of lines, erection of poles and stringing of lines shall be immediately brought to the notice of the headquarters of M/s Coastal Projects Pvt. Ltd., Hyderabad in writing, so that we take appropriate action to complete it. (13) If there is no work at site for a week time, M/s Vishwanath Projects, Hyderabad is authorized to take appropriate action which it deems fit. (14) Prices: Prices mentioned in the schedule of price (Annexure-II) are FIRM through the contract. (15) Any extra or additional items as required by NPCC have to be executed by M/s Vishwanath Projects Limited as per the agreement conditions. (16) Payment terms: All the payments will be made against the Bills rais....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it because the appellant failed to provide the break up. Had there been a break up of the material and the service components in the contract itself, the demand would have been raised on the service component ignoring the material. There is nothing on record which is placed before us which shows that there are two different contracts or a single contract with two separate distinct components for supply of material and rendition of services. In view of the above, we find that the contract in question is a composite works contract. Composite works Contract involve both rendition of service and deemed sale/sale of the materials used in rendering such services. The Hon.'ble Apex Court has observed in the case of Larsen & Toubro (supra) that works contract is a separate specie of contract known to the trade and commerce distinct from a contract for supply of goods or a contract for supply of services. In view of the above, we have no hesitation in concluding that the contract in question is a composite works contract and could have been taxed only under the head of "Works Contract Services" post 01.06.2007. It is not in dispute that the entire period in question is post 01.06.2007. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7124968 1781242 220161 0 220161 2009-10 6610969 1652742 170232 0 170232 2010-11 10992318 2748079 283052 148245 134807 Total 594425 19. Of the above amount, the appellant have conceded and paid service tax amounting to Rs. 3,34,653/- . The remaining amount of freight paid, according to the appellant, was paid to their vendors towards freight. The vendors in turn had availed the services of GTAs and paid them. In other words the appellants claim that they have only reimbursed to their vendors for the goods transport agencies services which they had paid. The department's contention is that they have not produced any evidence to substantiate this fact. 20. It is seen from the show cause notice that the entire demand was raised only based on the records of the appellant indicating the freight expenses incurred by them. The department has no other evidence to show that the appellant had availed the services of GTA operators. Having accepted the appellants records, as far as the total freight expenses incurred are concerned, the department seems to reject their contention that part of th....