TaxTMI 
TaxTMI 
2023 (4) TMI 348
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....ice tax and the sub-contractor need not to pay the same. However Appellant against the audit objection paid the service tax of Rs. 15,60,153/- along with interest. Further the Appellant were requested by the Range officer vide letter dated. 27.09.2010 to intimate whether their contracts for Erection, Commissioning and Installation services were composite contracts or otherwise and to produce the copies thereof, in response, the Appellant vide letter dated 07.12.2010 informed that they are providing erection and commissioning services and they receive the orders from the parties for material and installation separately; and that they raise invoices for material and service portion separately and hence their contracts are not composite contracts. On scrutiny of the documents submitted by the Appellant, it appeared that they had provided complete services of design, supply, erection, commissioning and installation. However Appellant had bifurcated the composite contracts into supply portion and service portion and were not paying service tax on supply portion. Statement of Shri Dipak Patel, Manager (Finance & Accounts) was recorded. After detail investigation, show cause notice dated ....
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....s. 2,41,64,485/- under Section 78 ibid. As regard the second periodical show cause notice dated 21.05.2013 he confirmed the service tax demand of Rs. 1,01,48,866/- under Section 73 of the Finance Act, 1994 on the taxable value of Rs.15,21,16,142/- charged and collected from the clients by the appellant during the period 2011-2012; interest is ordered to be recovered on this service tax demand amount. He also imposed penalty of Rs. 10,000/- under Section 77(2) of the Finance Act, 1944 and penalty of Rs. 10,14,887/- under Section 76 of the Finance Act, 1994. 2.3 Feeling aggrieved with the impugned order dated 04-3-2016 passed by the Learned Principal Commissioner of Service Tax, Ahmedabad the appellant has filed these appeals before the Tribunal. 03. Shri Hardik Modh, Learned counsel appearing for the appellant submits that Learned Commissioner has erred in not appreciating the fact that the Hon'ble Tribunal had though kept all the issues open, but the remand order was passed basically to look into the voluminous records and find out the fact whether or not the appellant had paid service tax on the services rendered and paid VAT on the material supply portion. In earlier procee....
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....ately identified. As well as one can pay service tax in category of Erection, Commissioning or Installation by taking the benefit of general exemption Notification No. 12/2013-ST for exclusion of material from taxable value of service. So Works Contract is option available with assessee. If one wants to take benefits of Works Contract Services then they can opt for Works Contract Service and pay the service tax under Works Contract Service. Accordingly, the Appellant while performing the service under different contract with their clients, based on the character of the contract classified their services and paid service tax. 3.3 He also submits that in case contracts which were purely for supplying material, the appellant have issued sale invoices and paid VAT at full rate. The contracts which were composite in nature, the service receiver themselves have bifurcated the value of entire contracts towards material portion and towards service portion. In such composite contract which were made by them with the service receivers after 01.06.2007, the appellant have classified the service under works contract service, the service tax has been paid under composite scheme. The third ca....
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....td., in as much as, the said receipt was for the goods and materials used by the Appellants for providing the said services. The Appellant had purchased these goods and materials from the manufacturers and sold it under separate invoices to M/s Jaihind Projects Ltd. The said activity was purely a trading activity of the Appellant. This facts is evident from the books of account viz., Balance Sheet of the Appellant for the year 2007-08 to 2010-11 where this value was shown under the head "Trading". The Learned Commissioner has also erred in holding that the benefit of Notification No. 12/2003-ST was being denied, in as much as, there is no question of the appellant having claimed any such exemption/abatement under Notification No. 12/2003-ST in respect of the said amount of traded goods on which the demand has been confirmed by the department considering the same as receipts of taxable value, as the said trading activity was done under a separate contract and the appellant have paid VAT on this value while issuing sales invoices to JPL. 3.6 He also submits that each contract which is the subject matter in show cause notices, in most of contracts, the clients i.e. the service rece....
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.... receiver. It is for the department to take action against the service receiver and ask them to reverse the cenvat credit. In the present scenario, even though the invoices of manufacturers/ vendors are in the name of the Appellant as "Buyer" still the credit has not been taken, per se gives the appellant a legal right to claim exemption under Notification No. 12/2003-ST. 3.7 He also submits that even as per finding of the Learned Commissioner in para 25.4 of the impugned order as assessee paying service tax under Works Contract Service can pay service tax on the gross amount charged for the work contract less the value of transfer of property in goods involved in execution thereof, and where VAT/CST has been paid on transfer of property, than the value adopted for such payment of VAT/CST is to be considered for deduction towards value of property transferred. Assuming that all the contracts under which the Appellants have provided services are to be classified under Works Contract Services, the Appellant have provided figures of sales value under each contract and value on which VAT/CST is paid which is clearly evident from the worksheet annexed. Hence, the Appellant are legall....
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.... on the departmental clarification and judicial pronouncements in this regards. Under such circumstance extended period of limitation cannot be invoked and penalty cannot be imposed. 04. On the other hand Shri Tara Prakash, learned Deputy Commissioner (AR) appearing for the Revenue reiterated the findings recorded in the impugned order in support of confirmation of the adjudged demands on the appellant. 05. We have heard both sides and perused the records. The issue involved in the present case is that whether the value of materials supplied by the Appellant under a contract is required to be included in the taxable value of Service or otherwise. The same is also clear from the para 21 of impugned order. The relevant portion of impugned order reads as under : - 21. Since the SCNs under subject involve multiple demands and sundry issue, I would list out the same below for ease of discussion and would take them up in seriatim. (i) whether the amount of Rs. 1,26,22,597/- received by the said assessee from their main contractors, namely M/s JPL towards providing "erection, commissioning and installation services" to GAIL and GSPL during the FY 2007-08 would be c....
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.... other cases we have paid service tax @10.3% and taken cenvat credit of inputs. In respect of erection commissioning and installation service category the installation charges and supply of the goods are bi-furcated in the tender it self and according we are paying service tax only on installation charges and showing goods and materials as supply. 5.2 After appreciating the above facts and going through the contracts and documentary evidences in the form of invoices, Balance sheet and Profit and Loss account, VAT return and detailed work sheet showing bifurcation of supply of goods and service portion separately submitted by the Appellant before us, we find that the contracts entered into by the appellants with their customers also gave the break-up of value of service portion and supply of material/goods portion. The Appellant as per the contract raise the bills and also account for the transaction in their books of account. On service portion they have paid the Service tax and on material supply portion paid the VAT/CST as applicable. We find that there is no dispute about the factual aspects. Admittedly, the contract showed the cost of each and every item separately. In terms....
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....terials sold, has been taken under the provisions of the Cenvat Credit Rules, 2004; or (b) where such credit has been taken by the service provider on such goods and materials, such service provider has paid the amount equal to such credit availed before the sale of such goods and materials." Upon perusal of the same, we find that the benefit is available only subject to satisfaction of conditions specified therein above Notification No. 12/2003-S.T., dated 20-6-2003 provides for excluding the value of goods and materials sold by the assessee to the recipient of service for the purpose of computation of Service Tax liability. This notification applies to all the services including "erection, commissioning and installation services" rendered by the appellant herein. If that be so, benefit of notification cannot be denied to the assessee and has to be allowed, if the assessee has fulfilled the terms and conditions of the notification. The above notification provide the condition that no credit of duty paid on such goods and materials sold has been taken under Cenvat Credit Rules, 2004; or when such Cenvat credit has been taken by the service provider on such goods and mat....
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....ter which is legally not correct and against the remand direction of Tribunal. 5.5 Further, from the documentary evidence produced by the Appellant before us we find that the appellant have paid sales tax as also VAT on the material used in providing the said service by them. The ratio of the various decisions of the Tribunal are to the effect that where the salestax and VAT stands paid on the material it has to be held that the goods were sold by the assessee. In such a scenario, the value of the same, cannot be added in the value of taxable service. Reference in this regards is made to the following decisions :- • WIPRO G.E. MEDICAL SYSTEMS PVT. LTD. V. CST, BANGALORE - 2009 (14) S.T.R. 43 (TRI.-BANG.) • DISPALLA HOTELS LTD. V. CCE, VISAKHAPATNAM - 2010 (18) S.T.R. 75 (TRI.-BANG.) • LSG SKY CHEFS (INDIA) PVT. LTD. V. CST, BANGALORE - 2010 (18) S.T.R. 37 (TRI.-BANG.) • IMAGIC CREATIVE PVT. LTD. V. CCT - 2008 (9) S.T.R. 337 (S.C.) • DELUX COLOUR LAB PVT. LTD. V. CCE, JAIPUR - 2009 (13) S.T.R. 605 (TRI.-DEL.) • PLA TYRE WORKS V. CST, TRICHY - 2009 (14) S.T.R. 32 (TRI.-CHENNAI). 5.6 In several decisio....
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....ATED 13-10-1997 • MASTER CIRCULAR NO. 96/7/2007-S.T., DATED 23-8-2007 In fact, also from various following decisions of the Tribunal :- • Urvi Construction v. CST, Ahmedabad - 2010 (17) S.T.R. 302 (Tri. Ahmd.) • CCE, Indore v. Shivhare Roadlines - 2009 (16) S.T.R. 335 (Tri.-Del.) • Harshal & Company v. CCE, Vadodara - 2008 (12) S.T.R. 574 (Tri.-Ahmd.) • Semac Pvt. Limited v. CCE, Bangalore - 2006 (4) S.T.R. 475 (Tri.-Bang.) • Shiva Industrial Security Agency v. CCE, Surat - 2008 (12) S.T.R. 496 (Tri.-Ahmd.) • Synergy Audio Visual Workshop P. Ltd. v. CST, Bangalore - 2008 (10) S.T.R. 578 (Tri.-Bang.) • OIKOS v. CCE, Bangalore - 2007 (5) S.T.R. 229 (Tri.-Bang.) In the Tribunal's decision in the case of OIKOS v. CCE, Bangalore - III reported in 2007 (5) S.T.R. 229 (Tri.-Bang.) after taking note of the Board's Circular dated 7-10-1998 as also Delhi Commissionerate Trade Notice No. 53/CE (ST)/97, dated 4-9-1997, Tribunal held that as the main serviceprovider has discharged the tax liability, no separate Service Tax can be confirmed against the sub-contractor. To the similar effe....