TaxTMI 
TaxTMI 
2023 (8) TMI 475
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....e Commissionerate, Rajkot. On the basis of investigation, it was found that during the period 2004-05 to 2008-09, the appellant had failed to pay the service tax for the services of "Commercial and Industrial Construction" provided to various customers and accordingly the demand of Rs. 2,12,91,371/- was made vide show cause notice dated 23.10.2009 which has been confirmed vide the impugned order. The details of the demand confirmed are mentioned in the table below:- Service Tax payable Name of Clients to whom construction services provided by M/S Vrutika Enterprises, Rajkot 2004-05 (from 10.09.0 4) 2005- 06 2006-07 2007-08 2008-09 (upto 31.12.08) Total M/s Suzlon Infrastructure Ltd, Pune 5647991 1743826 351291 7743108 M/s Suzlon In Fastructure Services Ltd, Pune 6464017 2396236 8860253 M/s Rajk....
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....sifiable under the "Commercial or Industrial Construction" as defined under Section 65(30a) and 65(25b) read with Section65(105)(zzq) of the Act; (b)Service provided by them to M/s. Suzlon Infrastructure Limited and M/s. Suzlon Infrastructure Service Limited are classifiable under the category of "Erection, Commissioning or Installation" service under Section 65(105)(zzd) Act, in addition to "Commercial or Industrial Construction" service;(c) Service provided by them are also classifiable under the category of "Works Contract" under Section 65(105)(zzzza) of the Act. That services provided to M/s. Suzlon Infrastructure Limited, Pune and M/s. Suzlon Infrastructure Services Limited merit classification under all the aforesaid three categories. However, they agreed with the classification under the category of "Commercial or Industrial Construction" for services provided by them to M/s. Suzlon Infrastructure Limited, Pune during the period2006-07 to 2008-09 and services provided by them to M/s. Suzlon Infrastructure Service Limited during the years 2007-08 and 2008-09 (upto25.8.2009) but they do not agree to classify the services provided by them to the said firm during 2008-09 (with ....
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....ed 15.3.2007 under the category of "Commercial or Industrial Construction" service in spite of the fact that both the invoices were raised for use of JCB and tractors on rental basis; that such service is "supply of tangible goods for use" service, which came into effect from 16.5.2008 cannot be considered as taxable under the category of "Commercial or Industrial Construction" service; They have further submitted that benefit of concessional rate of duty under the category of Work's contract may not be denied on account of procedural or technical lapse on their part involved in failure to take registration under the Work's contract category and non-fling of contract with the Department, particularly, when they 'were already registered under one of the categories and had also submitted copy of the contract to the Department at a later stage. (ii) With regard to their taxability towards services provided to other parties, they have submitted that they have re-calculated Service tax on receipt basis by taking the receipts in respect of service rendered after10.9.2004 and by applying abatement as provided under Notification Nos. 15/2004-S.T., dated 10.9.2004 and 1....
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....g to them, their Service tax liability comes to Rs. 6,567/- after applying the cum-duty principle. They have further submitted that benefit of Notification No. 15/2004-ST, dated 10.09.2004 and Notification No. 1/2006-ST dated 01.03.2006 cannot be denied to them. They have further submitted that during the period from 10.90.2004 to 28.2.2005, there was no condition to include value of goods and materials supplied or provided or used by the provider of construction services; that Notification No. 15/2004-ST dated 10.9.2004 was amended by Notification No. 4/2005-ST dated 01.03.2005, whereby, explanation to the effect that 'gross amount charged' shall include the value of goods and materials supplied or provided or used by the provider or the construction service for providing such service, was inserted; that as this explanation was 3 absent during the period prior to 01.03.2005, there was no legal requirement for inclusion of the value of goods and materials supplied or provided or used by the provider of services during the said period. They have further submitted that value of raw material supplied by the recipients of service is not includible in the value of ta....
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.... Cenvat credit as per law and by accounting the same in the prescribed manner and making the statutory declarations in Conformity with the prescribed limit are complied with, the claim for Cenvat credit that is made entirely on the basis of exhibits that were submitted in response to demand of Service tax which the appellant was busy evading during the entire period covered by the show cause notice does not merit any consideration . Regarding option to avail the classification of works contract services with effect from 25.08.2009, it was mentioned that the demand itself was upto 31.12.2008, therefore the same could not be applicable. Regarding two invoices bearing Nos. Extra 10 & 11 / Suz/ Kadoki/06-07 both dated 15.03.2007 under the category of "Commercial or Industrial Construction" service in spite of the fact that both the invoices were raised for use of JCB and tractors on rental basis, it has been mentioned in the impugned order that the copies of invoices produced are dated 8.6.2007 & 10.06.2007 and not 15.03.2007, therefore they do not support the claim of the appellant. The deduction on account of TDS has not been allowed as those were considered to part of the assessable....
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....clusive of service tax payable. M/s. Vrutika have not provided any documentary evidence in the form of contract, invoice, etc. showing that the amount charged by them from the above named service recipients was inclusive of service tax payable. Further, it has been held that provisions of Section 73A and proviso to Section 73(1) of the Act can be simultaneously invoked as Section 73A can be invoked for the reason that the appellant has collected the amounts from the recipients and not paid to the Govt. and further section 73(1) can be invoked for the reason that they neither filed any returns nor paid applicable Service tax of for these years. These facts clearly establish the malafide intention of the appellant and mere act of taking registration and filing isolated returns cannot act as any mitigating factor and provide a shield against invocation of extended period in accordance with the proviso to Section 73(1) of the Finance Act, 1994. That decision in the case of M/s. Avenue Regent, 2010 (17) STR 284 (Tri. Bang.) was not applicable as this decision was rendered on a completely different footing inasmuch as it involved reclassification of the service provided by the appl....
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....y service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract. 25. In fact, by way of contrast, Section 67 post amendment (by the Finance Act, 2006) for the first time prescribes, in cases like the present, where the provision of service is for a consideration which is not ascertaina....
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....rvice tax at percentages ranging from 2 to 4 of the gross value of the works contract. 29. It is interesting to note that while introducing the concept of service tax on indivisible works contracts various exclusions are also made such as works contracts in respect of roads, airports, airways transport, bridges, tunnels, and dams. These infrastructure projects have been excluded and continue to be excluded presumably because they are conceived in the national interest. If learned counsel for the revenue were right, each of these excluded works contracts could be taxed under the five subheads of Section 65(105) contained in the Finance Act, 1994. For example, a works contract involving the construction of a bridge or dam or tunnel would presumably fall within Section 65(105)(zzd) as a contract which relates to erection, commissioning or installation. It is clear that such contracts were never intended to be the subject matter of service tax. Yet, if learned counsel for the revenue is right, such contracts, not being exempt under the Finance Act, 1994, would fall within its tentacles, which was never the intention of Parliament. 30. It now remains to consider the ju....
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....ransferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties, charging or payment of interest, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly : Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf make necessary provision for all or any of the matters specified in this sub-section." 33. Section 13(3) of the Central Sales Tax Act says :- "The State Government may make rules, not inconsistent with the provisions of this Act and the rules made under sub-section (1), to carry out the purposes of this Act." 34. In the aforesaid judgment it was found that Section 9(2) of the Central Sales Tax Act conferred powers on officers of the various States to utilize the mach....
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.... While recognising what is now well-settled principle of law that a taxing statute is not wholly immune from attack on the ground that it infringes the equality clause in Article 14, this Court found that the enactment in question was violative of Article 14 of the Constitution for inequality was writ large on the Act and inherent in the very provisions under the taxing section thereof. Having said so, this Court also noticed that the Act was silent as to the machinery and the procedure to be followed in making the assessment. It was left to the executive to evolve the requisite machinery and procedure thereby making the whole thing, from beginning to end, purely administrative in character completely ignoring the legal position that the assessment of a tax on person or property is a quasi judicial exercise." Speaking for the majority Sinha, C.J. said: (K.T. Moopil case [AIR 1961 SC 552], AIR p. 559, para 9) "9. ... Ordinarily, a taxing statute lays down a regular machinery for making assessment of the tax proposed to be imposed by the statute. It lays down detailed procedure as to notice to the proposed assessee to make a return in respect of property proposed to....
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....cedure to make the assessment of the tax and leaves it entirely to the executive to devise such machinery as it thinks fit and to prescribe such procedure as appears to it to be fair, an occasion may arise for the courts to consider whether the failure to provide for a machinery and to prescribe a procedure does not tend to make the imposition of the tax an unreasonable restriction within the meaning of Article 19(5). An imposition of tax which in the absence of a prescribed machinery and the prescribed procedure would partake of the character of a purely administrative affair can, in a proper sense, be challenged as contravening Article 19(1)(f)." (emphasis supplied) In State of A.P. v. Nalla Raja Reddy [AIR 1967 SC 1458] this Court was examining the constitutional validity of the Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act, 1962 (22 of 1962) as amended by the Amendment Act (23 of 1962). Noticing the absence of machinery provisions in the impugned enactments this Court observed: (AIR p. 1468, para 22) "22. ... if Section 6 is put aside, there is absolutely no provision in the Act prescribing the mode of assessment. Sections 3 and ....
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....amined in each case." (at paras 15-21) 36. In a recent judgment by one of us, namely, Shabina Abraham &Ors. v. Collector of Central Excise & Customs, judgment dated 29th July, 2015, in Civil Appeal No. 5802 of 2005 = 2015 (322) E.L.T. 372 (S.C.), this Court held :- "It is clear on a reading of the aforesaid paragraph that what revenue is asking us to do is to stretch the machinery provisions of the Central Excises and Salt Act, 1944 on the basis of surmises and conjectures. This we are afraid is not possible. Before leaving the judgment in Murarilal's case (supra), we wish to add that so far as partnership firms are concerned, the Income Tax Act contains a specific provision in Section 189(1) which introduces a fiction qua dissolved firms. It states that where a firm is dissolved, the Assessing Officer shall make an assessment of the total income of the firm as if no such dissolution had taken place and all the provisions of the Income Tax Act would apply to assessment of such dissolved firm. Interestingly enough, this provision is referred to only in the minority judgment in M/s. Murarilal's case (supra). The impugned judgment in the present case has ref....
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.... Rule 13A of the Bihar Sales Tax Rules which was also amended by a notification dated 1-2-2000 reads as follows : "13A. Deduction in case of works contract on account of labour charges. - If the dealer fails to produce any account or the accounts produced are unreliable deduction under sub-clause (i) of clause (a) of sub-section (1) of Section 21 on account of labour charges in case of works contract from gross turnover shall be equal to the following percentages..." The aforesaid provisions have been adopted by the State of Jharkhand vide notification dated 15-12-2000 and thus are applicable in the State of Jharkhand. Interpretation of the amended Section 21(1) and the newly substituted Rule 13-A fell for consideration of a Division Bench of the Patna High Court in Larsen & Toubro Limited v. State of Bihar [(2004) 134 STC 354]. The Patna High Court in the said decision observed as under : "Rule 13-A unfortunately does not talk of 'any other charges'. Rule 13-A unfortunately does not take into consideration that under the Rules the deduction in relation to any other charges in the manner and to the extent were also to be prescribed. Rule ....
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.... merit in the stand taken for the respondents relying upon the decisions reported in [1957] 8 STC 561 (SC) (A.V. Fernandez v. State of Kerala) and [1969] 23 STC 447 (Mad.) (Kumarasamy Pathar v. State of Madras) that the omission to exclude certain items relating to non-taxable turnovers is of no consequence and does not affect or undermine the validity of the impugned proceedings. Consequently, applying the ratio of the above decisions, we hereby strike down rules 6-A and 6-B as illegal and unconstitutional, besides being violative of sections 3 to 6, 14 and 15 of the Central Sales Tax Act and consequently unenforceable. The provisions of section 3-B merely levied the tax on the transfer of property in goods involved in the execution of the works contract. The assessment, determination of liability and recovery had to be under the provisions of the Act read with the relevant rules. In exercise of rule-making power conferred under section 53(1) and (2)(bb), rules 6-A and 6-B came to be made and published. The rules miserably failed to provide the procedure and principles for effectively determining the taxable turnover, after excluding the items of turnover relating to such....
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....ion 65(105)(zzq) and (zzzh) therefore fails. The contention that there was/is no valid levy or the charging section is not applicable to composite contracts under clauses (zzq) and (zzzh) of Section 65(105) stands rejected. But the petitioners have rightly submitted that only the service component can be brought to tax as per provisions of Section 67 which stipulates that value of taxable service is the "gross amount charged" by the service provider for such services provided or to be provided by him and not the value of the goods provided by customers of service provider and the service tax cannot be charged on the value of the goods used in the contract." 41. We are afraid that there are several errors in this paragraph. The High Court first correctly holds that in the case of composite works contracts, the service elements should be bifurcated, ascertained and then taxed. The finding that this has, in fact, been done by the Finance Act, 1994 Act is wholly incorrect as it ignores the second Gannon Dunkerley decision of this Court. Further, the finding that Section 67 of the Finance Act, which speaks of "gross amount charged", only speaks of the "gross amount charged" for....
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....ONMENT BUILDING SYSTEMS PVT. LIMITED, the services provided by the appellant have to be classified as under :- (i) Where there is a single invisible contract for the service containing supply of raw materials and the construction activity, there was no taxability prior to 01.06.2007 and such contracts necessarily fall under the service of "Works Contract" with effect from 01.06.2007 and there is no option to pay duty under the category of "Commercial and Industrial Construction" service. The appellant may be given an option subject to production of supporting documents to pay duty on a value determined under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 or Works Contract (Composition Scheme for payment of Service Tax), 2007 and they will be allowed Cenvat credit as available under the respective provisions; (ii) Where there is a divisible work contract clearly defining value for the service portion and the value of raw materials, the service portion of the contract will be charged under the service of "Commercial and Industrial Construction" prior to 01.06.2007 and value of raw materials will not be added for determination of taxable value. The a....
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.... view that construction services provided Vyavasayi Vidhya Pratisthan (VVP), Rajkot and Sewa Bharti, Ahmedabad were not taxable. 10. As regards admissibility of benefit of cum-tax value for determination of assessable value, we are of the considered view that where the appellant has not issued a taxable invoice, and the services have been held to be taxable later-on as a result of investigation, the gross value charged by the appellant has be considered as "cum-tax value" under rule 67(2) of the Act which reads as "where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged" 11. The next issue to be decided is whether TDS deducted by the recipient has to be considered as part of the taxable value or not. We are of the considered view that TDS is nothing but part of the taxable value which comes back to the service provider in terms of the income tax deposited by the recipient. Thus the same is taxable and shall be part of the "gross amount charged" as given in exp....