TaxTMI 
TaxTMI 
2023 (5) TMI 764
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.... essential facts. 3. The appellant claims to be an infrastructure construction company engaged in executing turnkey projects in various fields, such as, irrigation projects and power projects. M/s Bhilai Electric Supply Company Limited Bhilai Electric is a company engaged in generation of electricity and it awarded a contract for setting up of a power plant to M/s Bharat Heavy Electricals Limited BHEL. BHEL sub-contracted a portion of the work to the appellant by a work order dated July 08, 2005. The job to be performed by the appellant under the work order was of land development which involves earth work, excavation, back filling, site levelling, grading and disposal. 4. A show cause notice dated August 29, 2006 first show cause notice was issued to the appellant for the period July 2005 to August 2006 proposing a demand of service tax of Rs. 1,51,14,126/- on the allegation that the appellant had undertaken the activity of preparation of site for the power plant which would be covered under the category of "site formation and clearance, excavation and earthmoving and demolition' services as defined under section 65(97a) of the Finance Act, 1944 the Finance Act which was tax....
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....to the tax demand of Rs. 61,44,148/- has already been covered in the taxation in the appeal No. ST/92 of 2008 because the assessee has disclosed in its return this figure due to bifurcation of return periods. The same gross value has undergone taxation and cannot be doubly taxed. But learned Commissioner denied that. But Revenue supports order of Authority below. 2. Upon hearing the matter and pleading of both sides, we have remanded the matter in Appeal No. ST/92 of 2008 in the manner indicated aforesaid. Therefore consequence of appeal No. ST/92/2008 having bearing on this appeal, pleading of double taxation can be factually examined and both cases can be taken up for disposal commonly to appreciate totality of facts and circumstances. To grant a fair opportunity of defence, we make it clear to the appellant that the appellant shall appear before learned Adjudicating Authority and satisfy him that the gross value of service giving rise to tax demand of Rs. 61,44,148/-have been included in the gross value covered by appeal No. ST/92 of 2008 so that there shall not be over lapping of demand. If the appellant fails to satisfy the authority, consequence as that shall be prop....
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.... Commissioner observed as follows: "I find that the Noticee during the course of the instant denovo adjudication proceedings, in their written submissions dated 13-12-2014 have raised a plea that the services rendered by them were classifiable under "Works Contract" service as brought into tax net from 01-6-2007 and therefore the impugned services were not taxable prior thereto. The plea is misplaced and not tenable in view of the fact that "Works Contract" service was brought into the tax net wef 01-06-2007 as also stated by the Noticee themselves. In the impugned proceedings against the Noticee the period involved i.e 08-7-2005 to 07-8-2006 in respect of the first Show Cause Notice dt.29-8-2006 and half yearly periods ended March' 2006 and September' 2006 in respect of the second Show Cause Notice dt.18-1-2008. As regards classification of services rendered by the Noticee during the material period, detailed discussions as at para 12.6 supra have brought home the fact that the impugned services were classifiable under "Site Formation" service." 12. In regard to the issue as to whether the appellant has correctly availed the CENVAT credit facility, the....
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....r dated July 08, 2005 as also the decisions of the Supreme Court in Commissioner, Central Excise & Customs vs M/s Larsen & Toubro Ltd. and others 2015 (8) TMI 749 - Supreme Court and Total Environment Building Systems Pvt. Ltd. vs Deputy Commissioner of Commercial Taxes 2022 (63) GSTL 257 (SC). 15. Learned counsel also contended that the CENVAT credit could not have been denied to the appellant merely on a technical ground that the invoices were issued in the name of other offices of the appellant. Learned counsel also submitted that penalty could not have been imposed on the appellant. 16. Shri Prashant Kumar, learned authorized representative appearing for the Department, however, supported the impugned order and submitted that it does not call for any interference in this appeal. Learned authorized representative, elaborating his submissions, contended that from a bare perusal of the work order it is more than apparent that the nature of work performed by the appellant would fall under the category of "site formation' service and that the Commissioner was justified in holding that the appellant could not have taken CENVAT credit. 17. We have considered the submissions a....
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.... which can be excavated by means of crow bar, pick axe etc. but does not require chiseling or (and) blasting including setting out, dressing the sides, leveling to grade and ramming/compacting the bottom, leveling, approaches, stacking/disposal of surplus excavated material within a lead of 1km etc. complete as per specification, drawing and as directed by the engineer. 9,593,280 3. 102(b) Earth work in excavation for leveling and grading beyond 2m & upto 4m depth below ground level in all types of soil including laterite, moorum, ash etc. which can be excavated by means of crow bar, pick axe etc. but does not require chiseling or (and) blasting including setting out, dressing the sides, leveling to grade and ramming/compacting the bottom, leveling, approaches, stacking/disposal of surplus excavated material within a lead of 1km etc. complete as per specification, drawing and as directed by the engineer. 548,775 4. 103 Disposal of surplus excavated earth beyond an initial lead of 1km and upto a lead of 5 km including leveli....
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....od earth has to be arranged by the contractor at its own cost. There can be no manner of doubt that the work order comprises both the service element as well as the goods element. 21. Keeping this in mind that it has to be examined whether the work to be performed would actually fall under the category of "site formation' service. "Site formation' has been defined in section 65(97a) of the Finance Act in the following manner : "(97a) site formation and clearance, excavation and earthmoving and demolition" includes, - (i) drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or (ii) soil stabilization; or (iii) horizontal drilling for the passage of cables or drain pipes; or (iv) land reclamation work; or (v) contaminated top soil stripping work; or (vi) demolition and wrecking of building, structure or road, but does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies;]" 22. The Supreme Court in Larsen & Toubro in par....
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.... 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 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. 40. Finally, in para 31, the Delhi High Court holds :- "The contention of the petitioners that the impugned notifications override the statutory provisions conta....
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.... Schedule of the Constitution of India read with Article 248 of the Constitution. The service tax provisions have the following basic scheme: (i) Section 65 of the Act provides for taxable services; (ii) Section 66 of the Act provides for the charge of service tax by the person designated as "the person responsible for collecting the service tax" for the Government; (iii) Section 67 of the Act provides for the value of taxable service which is to be subjected to 5% service tax; and (iv) Section 68 of the Act provides for the collection and payment mechanism for service tax. It is necessary to trace the evolution of charging service tax on works contract as discerned by this Court in the aforesaid judgments. While considering the rival contentions of the parties, it is also necessary to examine the issue of levying service tax on contracts said to be in the nature of works contract, both prior to, and following the introduction of an express charging provision to impose tax on works contract although we are concerned with the period prior to the definition of works contract w.e.f. 1st June, 2007 to Finance Act, 1994. This is with referenc....
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.... effect that even prior to the aforesaid amendment being made to the Finance Act, 1994 service tax on works contract was leviable is not correct. It was being levied on purely service contract and not on service element of works contract as there was no definition of a works contract till then. Hence, the amendment made to the Finance Act, 1994 by insertion of the definition of works contract as under clause (zzzza) is not clarificatory in nature. Having found that the Service Tax was not at all leviable on service element of a works contract, Parliament felt the need for the amendment and was so incorporated by the Finance Act, 2007. 27. Thus, the judgment in Larsen and Toubro Ltd. (supra) has been correctly decided and does not call for a re-consideration insofar as the period prior to 1st June, 2007 is concerned. In view of the above discussion, I agree with the result arrived at by His Lordship M.R. Shah J. vis-a-vis allowing all civil appeals under consideration except Civil Appeal No. 6792 of 2010 which is dismissed. No costs." 24. It has been found as a fact that the work order in the present case, involves both supply of services as also goods. It is, therefore,....