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2022 (10) TMI 319
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....ndred forty eight only) and order its recovery from the Noticee; 5.2 I order recovery of statutory interest at appropriate rate on the amount of Service Tax demand confirmed at Para 5.1 above from the Noticee, under the provisions of Section 75 of the Finance Act, 1994; 5.3 I do not impose any penalty under Section 76 of Finance Act, 1994 on the noticee in view of my findings at Para 4.21 above; 5.4 I impose a penalty of Rs. 10,000/- (Rupees Ten Thousand only) under Section 77 of the Finance Act, 1994, on the Noticee; 5.5 I impose a penalty of Rs. 16,84,61,4481- (Rupees Sixteen Crore eighty four lakh sixty one thousand four hundred forty eight only on the Noticee under the provisions of Section 78 of the Finance Act. 1994. II Show Cause Notice F.NO.STIDn. IV/Gr.V/SCN/Afcons Infra/2013-14/4520 dated 09- 05-2014 for Rs.1,67,27,398/- for the period April, 2012 to March, 2013. 5.6 I Confirm, in terms of Section 73(2) of the Finance Act, 1994 read with Section 68 ibid & Rule 6 of Service Tax Rules, 1994, the demand of Service Tax amounting to Rs. 1,67,27,398/- (Rupees One Crore sixty seven lakh twenty seven thousand three hu....
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....Engineers India Ltd. (hereinafter referred to as EIL), for the redevelopment of Connaught Place viz. Civil, Structural & Finishing works including Electrical, Fire fighting, etc. for service corridor in middle circle of Connaught Place (hereinafter referred to as the project). 2.2 On completion of tendering process, the composite contract for Rs.236,70,48,257/- was awarded to the Consortium for execution of the said project. As per the Detailed Letter of Acceptance dated 06/01/10 by Ell the scope of work allotted to the Consortium is Civil works which included RCC structure for the Service corridor including structural works i.e. Sheet piling, RCC works (Concrete, formwork, HYD bars), waterproofing, Structural steel and finishing works such as granite in staircase and tiling/glazing works in exits/entries. -Civil works shall also include the piping works for Drainage, Sewerage, Water Supply & irrigation works etc, Rain Water Harvesting shall also form part of the civil works. Electrical works which include Installation, Testing and commissioning of 23 nos (1600 KVA each), Compact substations and HT/LT cabling works, Other Works which includes fire fighting, CCTV & PA System for ....
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....ention to evade the Service Tax liabilities on the services rendered by them, as the said activities were known to the department only during the course of investigation. 2.7 A Show Cause Notice dated 28-09-2012 was thus issued to the appellant asking them to show cause as to why: i. service tax amounting to Rs.16,84,61,448/- (Rs. Sixteen Crores Eighty Four Lakhs Sixty One Thousand Four Hundred Forty Eight Only) inclusive of education cess and secondary & higher education cess on the taxable value of RS. 180,40,09,490/- should not be demanded and recovered from them in terms of proviso to section 73(1) of the Finance Act, 1994 as amended for the taxable service provided by them to EIL classifiable under Commercial or Industrial Construction since March, 2010, as defined under Section 65(105)(zzg) read under Section 65(25b) of the Finance Act, 1994. ii. appropriate interest should not be demanded and recovered from them under section 75 of the Finance Act, 1994. iii. penalty should not be imposed on them under section 77 of the Finance Act, 1994 as amended for their failure to furnish information, failure to produce documents, failure to pay appropriate....
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....is apparent that only construction services which are commercial in nature are taxable. Construction services which are non commercial in nature are outside the purview of service tax for period prior to 01.07.2012. Post 01.07.2012, services provided to Government, local authority or Government authority by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession are exempt vide Notification 25/2012-ST. • Since the construction of civil structure for NDMC is covered within the Jawaharlal Nehru National Urban Renewal Mission Scheme, the same is exempted from service tax levy vide entry no. 13 of the Mega Exemption No. 25/2012-ST for activities performed after 01.07.2012  As per the Board Circular No 80/10/2004-ST, dated 17-09- 2004 where government buildings or civil constructions are used for providing civic amenities, such services would not be taxable. • Circular No 116/10/2009-ST, dated 15.09.2009 has clarified that the "commercial or industrial construction service" is chargeable to service tax if it is used, occupied or engaged either ....
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.... • Toyo Engineering India Limited [2006 (201) E.L.T. 513 (S.C.)] • Ashish Ramesh Dasarwar [2017-TIOL- 3230-CESTAT-MUM] • Gurjar Construction [2019-TIOL-2199-CESTAT-DEL] • India Guniting Corporation [2021-TIOL-100-CESTATDEL] • In view of the confusion prevailing and the interpretation issues involved, invocation of extended period of limitation is incorrect and therefore the demand should be set aside. 3.3 Arguing for the revenue learned authorized representative while reiterating the findings recorded in the impugned order submits that: • at the first the time of issue of SCN, all the facts were not known by the Department and hence the demand was made under CICS. But after the fact that it was a composite contract came to the knowledge of the department, they have confirmed the demand under Works Contract Service. In this case, we cannot say that the Appellant has been denied any the due process of natural justice. • for the entire period of the demand both CICS and Works Contract Service were fully taxable. Since both the service of CICS and Works Contract Service is similar and hence it cann....
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....e services provided by the Noticee as Commercial or Industrial Construction Service defined under Section 65 (105) izza) read with Section 65 (25b) of the Finance Act. 1994. 4.2 Bidding documents is for Civil Structural and Finishing works including Electrical, Fire Fighting, Fire Detection, CCTV works for Service Corridor in middle circle of Connaught Place, New Delhi. The document was prepared and issued by EIL. The salient features of the tender document are as follows: EIL on behalf of M/s Sterling & Wason Private Limited invited sealed bids for the work specific: • The work also includes operation and maintenance for a period of six years from the date of Commissioning and handing over. In case the Bidder is a Consortium, Bidder is to submit copy of Consortium agreement • Total contract value is mentioned. EIL will act 3 Turn Key consultant. • Entire work is per scope of work covered under this contract shall be treated as Composite contract (refer para 2.6.1 of special conditions of contract.) Contractor shall pay Sales Tax on Works Contract and this should be included in the price quoted. If there is no any varia....
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...., structural and finishing work including electrical, fire fighting, fire detection, CCTV works for service corridor in the middle circle of Connaught Place. It is not under dispute that the entire premises is meant for commercial or business use. The premises are rented for commercial purpose by NDMC. 4.8 Municipal Corporations do undertake functions which are not sovereign in nature but activities which are purely commercial in nature. Constructing commercial premises and renting it out for use in business or commerce are not part of sovereign function but is commercial in nature. What is relevant is whether the building or civil structure is used primarily or occupied primarily or engaged primarily for commerce or industry or business. Connaught Place is a well known commercial centre and used and occupied primarily for commerce or industry. These are not considered as places for public purposes or for providing civic amenities. The shops are constructed for renting them out for commercial and business purposes. Therefore, the argument of the Noticee that the activities undertaken does not fall within the scope of services provided in relation to commercial or industria....
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.... to consider favourably the unsubstantiated claim of the Noticee. 4.11 The contract is between EIL on behalf of NDMC and the Consortium. What is relevant is the understanding between the contracting parties on the nature of the work undertaken and the tax liability. The contract is to be interpreted as per the specific terms of the contract. The contract categorically specifies the work as "composite works contract". The contracted price is inclusive of all taxes. The contracted price is fixed till completion of work. 4.12 It is pertinent to observe that the contract specifically mentions that the contracted price includes Service Tax and in the case of statutory amendment resulting into any increase or decrease in Service Tax rate, the actual Service Tax paid by the contractor will be reimbursed/ refunded subject to provision of documentary evidence. The bid document clearly envisages that the activity undertaken under this contract are leviable to Service Tax. The contract also makes it obligatory on the part of the contractor to include Service Tax at the prevailing rate while quoting the rate. The contract envisages and specifically provides for payment of Ser....
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....prove that they have not taken cenvat credit of duties or cess paid on the inputs used in or in relation to the impugned works contract. Therefore, in the absence of any such evidence, the Noticee's unsubstantiated claim for abatement is untenable. 4.16 In view of the foregoing, the impugned demands of Service Tax raised under (i) F.NO.VIST-1/HQIAF/ENQ/Gr. 09/09/2012/3139 dated 28-09-2012 for Rs 16,84,61,448/-, (ii) F.NO.ST-Il/Dn.IV/GIV/SCN/Afcons Infra/2013-14/4520 dated 09-05-2014 for Rs. 1,67,27,398/- and (iii) F.No.ST-VI/Dn-1/Afcon Infra/33/2013-14/2410 dated 11-02-2015 for Rs. 1,72,93,970/- are liable to be confirmed. 4.2.2 From the perusal of the findings recorded in the impugned order para 14, it is evident that the Commissioner has accepted the plea taken by the Appellant that the services provided by them do not merit classification under the category of "Construction of Commercial Complex" as defined by the Section 65 (25b) of the Finance Act, 1994, but would merit classification under the category of "Work Contract Service" as defined by Section 65 (105) (zzzza) of the Finance Act, 1994. Admittedly the contract in the present case involves transfer of pro....
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.... 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 contracts how much shall be the percentage of the total amount charged for the works contract, attributable to the service element in such contracts. It is this scheme and this scheme alone which complies with constitutional requirements in that it bifurcates a composite indivisible works contract and takes care to see that no element attributable to the property in goods transferred pursuant to such contract, enters into computation of service tax. 27. In fact, the speech made by the Hon'ble Finance Minister in moving the Bill to tax Composite Indivisible Works Contracts specifically stated :- "State Governments levy a tax on the transfer of property in goods involved in the execution of a works contract. The value of services in a works con....
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....nch in the case of India Guniting Corporation [2021-TIOL-100- CESTAT-DEL], stating as follows: 19. Learned Counsel for the appellant has submitted that there was no necessity for the Commissioner to examine whether service tax is exempted under the Notifications because a demand made under a particular category of service cannot be confirmed under a different category of service. 20. That submission advanced by the learned Counsel for the appellant has force and it is not possible to accept the contention of the learned Authorized Representative of the Department that a demand made under a particular category can be confirmed under a different category. In this connection it would be pertinent to refer to the decision of the Mumbai Tribunal in Ashish Ramesh Dasarwar vs Commissioner of Central Excise & Service Tax, Nagpur [2017-TIOL-3230-CESTATMUM]. The Division Bench of the Tribunal held as follows: "6. As regards the period after 1.6.2007, since the demand was raised under "commercial or industrial construction service, whereas admittedly the service is correctly classifiable under works contract service, the demand raised under wrong head of service cannot susta....
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....al was quite wrong in these circumstances in allowing the appeal of the Excise Authorities and classifying the mint tablets as items of confectionary under Heading 17.04. The correct course for the Tribunal to have followed was to have dismissed the appeal of the Excise Authorities making it clear that it was open to the Excise Authorities to issue a fresh show cause notice to the appellant on the basis that the tablets were classifiable under Heading 17.04 as items of confectionary. This would have given the appellant the opportunity to place on record such material as was available to it to establish the contrary. It is impermissible for the Tribunal to consider a case that is laid for the first time in appeal because the stage for setting out the factual matrix is before the authorities below." 10. In view of the above settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain. Therefore, we are not addressing the issue that whether the appellant's classification was correct or otherwise. The appellant also made a....
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....nd that the work undertaken by the appellants is not in relation to tunnel. The contract specifically does not provide that work undertaken falls in relation to any tunnel. It is settled principle of law that exemption notifications need to construed strictly and any ambiguity in the same needs to be resolved in the favour of the revenue. Hon'ble Supreme Court has in the case of Dilip Kumar & Co [2018 (366) ELT (SC)] held as follows: "52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled." 4.2.7 Since appellant have failed to substantiate their claim to the b....
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....lue added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works contract under this clause. (ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:- (A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract; (B) in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent. of the total amount charged for the works contract; (C) in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property, service tax shall be pa....
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....he Noticee have contended that in the absence of suppression, the extended period of limitation cannot be invoked. I find that the noticee was fully aware of the fact that the construction activity carried out by them falls under the category of "Works Contract Service" as stipulated in Para 2.6.1 of the contract between them and EIL. Also as per Para 5.6 of special conditions of contract, the burden to pay service tax for the impugned works contract was on the Noticee and they were liable to pay service tax The Noticee self-assessed Service Tax liability and accordingly made Service Tax payment. The only source of information received by the department was ST-3 returns filed. It is not the case of the noticee that they have declared any information about the impugned works contract to the Department. Nonpayment of Service Tax was brought to the notice by the Commissionerate of Service Tax, New Delhi when inquiry was initiated. Noticee was under legal obligation to discharge the Service Tax liability. The Show Cause Notice is a result of investigation carried out by the Department. Therefore, there is case of suppression of material facts and contravention of various provisions of ....
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....ally from confirmation of demand as recoverable. Therefore, the assessee is liable to pay interest at the appropriate rate under Section 75 of the Finance Act, 1994." We do not find any infirmity in the demand of interest as per the impugned order in respect of the amount of service tax that is required to be paid. 4.6 On the issue of penalty Impugned order records following findings: "4.21 As regard penalties proposed in the SCNs under Sections 76, 77 & 78 of the Finance Act, 1994, the noticee has submitted that no penalty is imposable upon them and in any case penalties under Section 76 and 78 being mutually exclusive cannot be imposed upon them simultaneously. In this connection, at the outset it has to be mentioned that the amendment made in Section 78 with effect from 10.05.2008. by way of insertion of a proviso to the effect that if penalty is payable under Section 78, the provisions of Section 76 shall not apply. The impugned SCNs pertains to period March, 2010 to March, 2014. This would mean that the entire demand relates to period subsequent to the amendment made on 10.05.2008 in Section 78 and hence if penalty is imposed under Section 78, no penalty is impo....