TaxTMI 
TaxTMI 
2020 (11) TMI 798
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....rohibition, or any other appropriate writ, order or direction, completely and permanently prohibiting the respondents, their servants and agents from taking any action against the Petitioner pursuant to Show Cause Notice F.No. STC/ 452/O&A/ SCN/ NJD/ 2006 dated 12.3.2007 and for the subject matter involved in this show cause notice; (C) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, direction or order directing the 3rd Respondent Commissioner of Service Tax, Ahmedabad to return Rs. 2 lakhs pre-deposited by the Petitioner along with interest @6% per annum from the date of deposit till the actual payment to the petitioner; (D) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, direction or order holding and declaring that the Petitioner was not liable to pay any service tax on the services involved in the present case and no action whatsoever by the Respondents is permissible against the Petitioner for the works contract service involved in the present case involving the period from October, 2005 to March, 2006; (E) Pending hearing and final disposal of the present pet....
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....ilding or a civil structure and not any commercial or industrial construction. According to the petitioner, when it realized that the services rendered by it was actually taxable under 'Works Contract Service' category, the petitioner applied for a registration for works contract service, which was granted by the respondent authorities in January, 2008. 3.5. The petitioner has thereafter paid service tax for the construction activities carried out by him under works contract service at an appropriate rate leviable for such taxable service and returns were filed by the petitioner under works contract service which were accepted and assessed by the respondent authorities. 3.6. It is the case of the petitioner that, during the period from October, 2005 to March, 2006, the petitioner paid service tax under the head 'commercial or industrial construction service', though no service tax was leviable at all, on the business activity of the petitioner at that time though the petitioner rendered the 'works contract service' which was liable for levy of such service tax w.e.f. 01.06.2007. 3.7. According to the petitioner, petitioner was receiving services of goods transport operator....
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.... paid service tax on commercial or industrial construction service during the period on abated value by availing abatement allowed under Notification No. 1/2006-ST dated 01.03.2006, but abatement in value under this notification was wrongly availed by the petitioner, as the condition for abatement under the notification was that the service provider should not have taken credit of duty paid on input services used for providing such taxable service. Since the petitioner had availed Cenvat credit of service tax paid on GTA service in March, 2006, objection was raised and the differential service tax denying the benefit of the notification dated 01.03.2006 was raised under the head 'commercial or industrial construction service' was supposed to be recovered with interest and penalty from the petitioner. 3.11. The petitioner thereafter submitted a reply dated 26.03.2007 to the show cause notice and explained that there was no violation of condition of the Notification in not taking Cenvat credit of service tax paid on input services because the Cenvat credit taken in the month of March, 2006 was actually in respect of service tax paid for input services availed and utilized from Jan....
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....ssioner, the petitioner went into appeal before the Appellate Tribunal. The petitioner raised again fundamental ground that there was no liability to pay service tax prior to 01.06.2007 because it was for the first time that the business activities of the petitioner, which were in the nature of works contract, had been brought under the levy of service tax w.e.f. 01.06.2007 by introducing a new service tax category. 3.15. The Appellate Tribunal by an order dated 22.06.2009 granted stay against the recovery on condition of deposit of Rs. 2,00,000/- by the petitioner. 3.16. The petitioner deposited Rs. 2,00,000/-. Thereafter, the question about propriety for levy of service tax on works contract for prior period came up before the Supreme Court in case of Larsen & Tourbo Ltd. and the Supreme Court in decision in the case of Commissioner of Central Excise and Customs, Kerala v. Larsen & Tourbo Ltd. reported in 2015 (39) STR 913 (SC) held that, 'works contract service' was made liable to service tax only w.e.f. 01.06.2007, and therefore, service tax was not leviable on works contract for the period prior thereto. Following the decision of the Supreme Court, various other High Cou....
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.... because the Hon'ble Members who heard and allowed the appeal of the petitioner on 02.04.2019 came from Mumbai, and such order was brushed aside by observing that the order of the Mumbai Tribunal had no bearing on the issue before the Appellate Tribunal because the petitioner has separate registration at Mumbai. However, it is the case of the petitioner that the petitioner has only one place of business i.e. at Ahmedabad and only registration that the petitioner held was at Ahmedabad. 3.21. The petitioner has therefore, being aggrieved by such order passed by the Tribunal, which is contrary to the binding precedent of the judgment of the Supreme Court as well as order passed by the Appellate Tribunal in the case of the petitioner itself and other similar cases, has filed this petition, as the Tribunal ultimately remanded the matter back for verifying that whether the Cenvat credit of GTA services was reversed or not to the adjudicating authority. 4.1. Learned advocate Mr. Paresh M. Dave appearing for the petitioners submitted that the facts of the case are glaring as the Tribunal could not have decided the Appeal No. ST/107/2009 contrary to the decision of the Supreme Court a....
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....s. 7. In view of the well settled position of law that the composite contract, involving both execution of the job and for supply of material for achieving such object, should appropriately be classifiable under Works Contract Service and not under any of the other defined category of service, we do not find any merits in the impugned order for endorsing the views expressed therein." 4.3. Learned advocate therefore submitted that the Tribunal has erred in law in deferring with the decision of Coordinate bench holding that it was the decision of the Mumbai Tribunal. 4.4. Learned advocate for the petitioner further invited attention to the synopsis of dates, events and proposition filed before the Tribunal, which was not at all considered by the Tribunal while passing the impugned order, which read thus: 5. Heard both the sides and perused the records. Admittedly the Appellant were registered under the category of construction service and no dispute was raised by them regarding classification of service. Even though the category of "Works Contract" came into effect from 01.06.2007, they applied for said category only in January, 2008. They never contested thei....
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....are two contradictory decisions in the case of the petitioner, one in Service Tax Appeal No. 379/2009 and another in Service Tax Appeal No. 107/2009. The decision in Service Tax Appeal No. 379/2009 is based upon the decision of the Supreme Court, whereas, the Tribunal while passing the impugned order in Service Tax Appeal No. 107/2009 did not assign any reason for not following the settled legal position which is gross violation of the principles of natural justice, as held by this Court in case of Vadilal Gases Ltd. reported in 2016 (332) ELT 625 (Guj.) and Manek Chemicals Pvt. Ltd. reported in 2016 (334) ELT 302 (Guj.). 4.7. Learned advocate Mr. Dave therefore submitted that, the petitioners are in such circumstances constrained to invoke the extraordinary jurisdiction of this Court under Article 226 /227 of the Constitution of India for correcting such jurisdictional error, and also the redressal of grievance for gross violation of principles of natural justice that has resulted in exfacie illegal order against the petitioner instead of filing appeal before this Hon'ble Court under the provisions of Central Excises Act. 4.8. Mr. Dave on merits submitted that, the services ....
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....India, (2006) 3 SCC 1, as follows:- "No one denies the legislative competence of the States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction. This does not however allow the State to entrench upon the Union List and tax services by including the cost of such service in the value of the goods. Even in those composite contracts which are by legal fiction deemed to be divisible under Article 366(29-A), the value of the goods involved in the execution of the whole transaction cannot be assessed to sales tax. As was said in Larsen & Toubr o v . Union o f India[(1993) 1 SCC 364] : (SCC p. 395, para "The cost of establishment of the contractor which is relatable to supply of labour and services cannot be included in the value of the goods involved in the execution of a contract and the cost of establishment which is relatable to supply of material involved in the execution of the works contract only can be included in the value of the goods." For the same reason the Centre cannot include the value of the SIM cards, if they are found ultimately to....
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....is a stipulation in the contract that the customer is obliged to undertake the work of civil construction and the bulk of the material used in construction belongs to the manufacturer, is not correct, as the subsequent discussion would show; and second, the Notification dated 17-5-2010 issued by the Government of Haryana, Excise and Taxation Department, whereby certain rules of the Haryana Value Added Tax Rules, 2003 have been amended and a table has been annexed providing for "Percentages for Works Contract and Job Works" under the heading "Labour, service and other like charges as percentage of total value of the contract" specifying 15% for fabrication and installation of elevators (lifts) and escalators, is self-contradictory, for once it is treated as a composite contract invoking labour and service, as a natural corollary, it would be works contract and not a contract for sale. To elaborate, the submission that the element of labour and service can be deducted from the total contract value without treating the composite contract as a works contract is absolutely fallacious. In fact, it is an innovative subterfuge. We are inclined to think so as it would be frustrating the con....
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.... "Another question that arises for consideration in this connection is whether sub-section (1) of Section 127-A and the proviso to sub-section (2)(b) should be construed together and the annual letting values of all the buildings owned by a person to be taken together for determining the amount to be paid as tax in respect of each building. In our considered view this position cannot be accepted. The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. t....
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....is such an asset, it is permissible, as we shall presently show, to refer to certain other sections of the head, "Capital gains". Section 45 is a charging section. For the purpose of imposing the charge. Parliament has enacted detailed provisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by Section 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by Section 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the Income Tax Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident....
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....ike the present, where the provision of service is for a consideration which is not ascertainable, to be the amount as may be determined in the prescribed manner. 26. We have already seen that Rule 2(A) framed pursuant to this power has followed the second Gannon Dunkerley case in segregating the 'service' component of a works contract from the 'goods' component. It begins by working downwards from the gross amount charged for the entire works contract and minusing from it the value of the property in goods transferred in the execution of such works contract. This is done by adopting the value that is adopted for the purpose of payment of VAT. The rule goes on to say that the service component of the works contract is to include the eight elements laid down in the second Gannon Dunkerley case including apportionment of the cost of establishment, other expenses and profit earned by the service provider as is relatable only to supply of labour and services. And, where value is not determined having regard to the aforesaid parameters, (namely, in those cases where the books of account of the contractor are not looked into for any reason) by determining in different works cont....
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....es, which was never the intention of Parliament." 4.11. Reliance was placed on the decision of the Kerala High Court in case of Wexco Homes Pvt. Ltd. v. Union of India reported in 2017 (48) S.T.R. 457 (Ker.), wherein, the Court has held thus: "4. On a consideration of the facts and circumstances of the case and the submissions made across the Bar, I find that the show cause notices issued to the petitioners, which are impugned in these writ petitions, cover the period from January, 2006 to June, 2010. During the said period, there were amendments to the Finance Act, 1994 with regard to the levy of service tax and, apart from the heads of 'commercial and industrial construction services'/'construction of residential complex services' that were recognised for the purposes levy of service tax, there was a new head of tax namely, 'works contract service', which was introduced in the statute with effect from 1-6- 2007. The issue of classification of composite services for the purposes of levy of service tax has been clarified by the Supreme Court in the decision referred to above, and the Supreme Court has made it clear that for period prior to 1-6-20....
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....ty is one that has to be legally sustained. In Ext.P4 order, the adjudicating authority does not give any finding with regard to the correct classification of the service rendered by the petitioner therein. The only reason cited in Ext.P4 order for confirming the demand in the show cause notice issued to the petitioner is that the petitioner could not contend for an alternate classification having already declared his service under the head of 'commercial and industrial construction services' /'construction of residential complex services'. In my view, the said reasoning of the adjudicating authority is erroneous, more so, in the light of the decision of the Supreme Court referred to above. I therefore quash Ext.P4 order, and direct the adjudicating authority to reconsider the matter in the light of the observations in this judgment. Needless to say that the petitioners shall be afforded an opportunity of hearing before the adjudicating authorities pass fresh orders, as directed." 4.12. The reference was also made to the decision of the Principal Bench of Tribunal, New Delhi in the case of B.R. Kohli Construction Pvt. Ltd. v. Commissioner of S.T., New Delhi reported in 2....
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....t to fulfillment of the conditions, the appellants are eligible to discharge service tax on such works contract, after 1.6.2007, in terms of composition scheme of 2007. The reason for denial of the benefit recorded in the impugned order is not sustainable. We find, considering the facts and circumstances of the case, the imposition of penalties on the appellant is not justified. The tax liability of the composite works contract has been a subject matter of large number of litigations and the final legal position was clarified only after the decision of the Hon'ble Apex Court, as above. In such situation, no penalty can be imposed on the appellant, especially when they have discharged service tax in terms of the provisions, as applicable during the relevant time and as per the understanding of such provision during the relevant time. As noted above, the appellants only contested this differential duty and penalties. No other issue is pressed during the submission by the appellant. Accordingly, we allow the appeal with reference to this differential service tax and the penalties. The appeal is accordingly disposed of." 4.13. Learned advocate for the petitioner thereafter relied up....
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....ct, 1994 r/w. Section 35G of the Central Excise Act, 1994 by way of preferring Tax Appeal before this Court. It was therefore submitted by him that the petition is required to be rejected only on this ground. Mr. Bhatt on merits submitted that, it is the case of the petitioner that the petitioner has raised a new ground before the Commissioner (Appeals) for the first time that the petitioner is not liable to pay service tax on works contract services provided by the petitioners prior to 01.06.2007. It was pointed out that the petitioner no.1 itself has registered for the services under the head of 'commercial or industrial construction services', and therefore, the petitioner cannot now say that the petitioner was not liable to pay service tax. 5.2. The learned advocate Mr. Bhatt submitted that, the issue before the adjudicating authority was the applicability of the notification dated 01.03.2006, as the petitioner availed Cenvat credit in March, 2006 from the GTA services. Therefore, according to the adjudicating authority, the petitioner was not entitled to the benefit of notification dated 01.03.2006 with regard to the abated value on the ground that the petitioner availed th....
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....sport terminals, bridges, tunnels and dams;] I say and submit that as per the definition accorded under the heading of CICS under the Contract, any construction activity of any civil structure, or part thereof or any such ancillary activities associated with construction were made taxable. I say and submit that therefore since the Petitioner was carrying out activities of Civil Construction, which were covered under the scope of CICS as reproduced hereinabove, Service Tax was correctly levied and paid as per the provisions of the Act. 9. I say and submit that in respect of para 16.1, 16.2 and 16.3, the contents thereof are denied. I say and submit that the activities of the Petitioner rightly fell under the category of CICS prior to 01.06.2007, wherein a new category of WC was provided under the provisions of the Act, and the Service Tax has been correctly levied and paid under the provisions of the Act. I say and submit that the Petitioner has taken benefit of Service Tax abatement under the provisions of the Notification no. 15/2004-ST dtd. 10.09.2004 and subsequent notification No. 01 /2006-ST dtd. 01.03.2006. I say and submit that the Petitioner has filed retu....
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....gned order passed by the Tribunal while exercising the power under Article 226 and 227 of the Constitution of India. 6.1. Having heard the learned advocates appearing for the receptive parties and having gone through the material on record, it emerges on record that the petitioner no.1 was rendering services classifiable as 'works contract'. This fact has neither been disputed by the Commissioner nor by the Tribunal. That only because the petitioner no.1 registered itself for the service tax under the head of 'commercial / industrial construction services', the petitioner cannot be fasten its liability to pay service tax on the services rendered by it as 'work contract' services. 6.2. The definition of taxable service as per Section 65 (105) (zzq) reads as under: Definitions. 65. In this Chapter, unless the context otherwise requires,- xxx 105. "Taxable service" means any service provided or (to be provided),- (zzq) to any person by, (any other person), in relation to (commercial or industrial) construction service." 6.3. Section 65 (25)(b) of the Finance Act, 1994 defines 'commercial or industrial construction services' as unde....
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....ng, lift and escalator, fire escape staircases or elevators; or b) Construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or c) Construction of a new residential complex or a part thereof; or d) Completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or e) Turnkey projects including engineering, procurement and construction or commissioning (EPC) projects;" 6.5. Considering the aforesaid amendment in the Finance Act, 1994, the Supreme Court in the case of L & T Ltd. (supra), after considering the decision of the Supreme Court in the case of Gannon Dunkerley reported in (1993) 1 SCC 364 held that the separation of the value of the goods contained in the execution of a works contract will have to be determined by working from the value of the entire works contract and deducting there from charges towards labour and services. The Apex Court therefore was of the opinion that the service tax charging Section itself must lay down with specificity that the levy of the service ta....