TaxTMI 
TaxTMI 
2023 (9) TMI 870
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....ds Repair and Maintenance service for the period from 2010-11 to 2014-15 and on the amounts received towards liquidated damages for the period from 2012-13 to 2014-15, apart from appropriate interest under Section 75 of the Finance Act, 1994 and penalty under Sections 76, 77 and 78 ibid. 2.2 For the subsequent period between April 2015 to March 2016, it appears that the assessee was issued with a Statement of Demand dated 17.05.2017 for the alleged non-payment of Service Tax on Repair and Maintenance service and liquidated damages. 3. It appears that the assessee filed its detailed replies dated 18.07.2016 and 12.02.2018 explaining its activities in detail and thereby explaining that their services were exempted since they are only rendering services to the Ministry of Defence, Government of India and that they are also exempted by Notification No. 25/2012-S.T. dated 20.06.2012, read with Section 102 of the Finance Act, 2016. 4.1 The Ld. Commissioner, having considered the explanation of the assessee, during adjudication proceedings, has, inter alia observed as under: - (i) In terms of the service order between HVF and the assessee, the order has been mentioned to be a service....
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....le towards amount received for repair and maintenance which has been quantified. Hence, the same is required to be construed as service which is rendered under repair and maintenance. (ii) Further, it is claimed that prior to 01.07.2012, it was performing manufacture and subsequent to that date, they were performing an exempted service, which clearly indicates that they are performing some sort of service similar to works contract, but now it has been claimed that they are doing erection / commissioning / installation of original works. But however, it is found that refurbished equipment of an original work cannot be an activity of manufacture. (iii) The assessee has arrived at the apportionment of supply and service values and started paying Service Tax from September 2014 onwards and the apportionment adopted is 22% for the service portion and the rest for the supply portion; that the apportionment has a strong persuasive value. Their contract value admittedly has suffered VAT and hence this 22%, being service portion, is also VAT paid; but however, since the same comes under the domain of the Central Government being a service value, service portion cannot be left with....
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....ty has confirmed the demands as proposed in Show Cause Notice No. 03/2015-16 dated 05.10.2015 along with applicable interest and penalty but however, has chosen to drop further proceedings initiated in the above Show Cause Notice on demand of Service Tax on the repair and maintenance service for the period from September 2014 to March 2015. He also dropped the demand of Service Tax on repair and maintenance service for the period 2015-16 initiated vide Statement of Demand No. BEL/GLT1/Commr./ST/04/2017 dated 17.05.2017 dated 17.05.2017, but has confirmed the demand on the liquidated damages apart from confirming appropriate interest and penalty, as proposed. 6. It is against this order and the demands therein that the present appeals have been preferred before this forum. 7. Heard Shri Raghavan Ramabadran, Ld. Advocate and Shri Harendra Singh Pal, Ld. Assistant Commissioner. 8.1 The contentions of the Ld. Advocate are summarized below: - * The appellant is a Navratna public sector undertaking under the Ministry of Defence and the main function of the assessee is to meet the specialised electronic needs of the Indian defence forces. It is eng....
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....that upon receipt of the impugned Order-in-Original, the appellant paid the entire demand of Service Tax along with interest, under protest, along with 25% of the demand towards penalty. * It is engaged in the manufacture and supply of parts of tanks and other armoured fighting vehicles, the entire activity was undertaken for the Ministry of Defence, Government of India, in respect of battle tanks deployed by the Indian Army. * The activity of manufacture and overhauling of gun control stabilizer undertaken by the appellant was exempt from payment of Central excise tax, vide Notification No. 63/1995-CE dated 16.03.1995. * The appellant, since is engaged exclusively in the activity of manufacture of defence equipment for the government of India, cannot be held liable under the guise of providing service. * He would also contend that repairs and maintenance made to sub-assemblies of Ajeya tanks is not amenable to Service Tax in the light of the exemption made available under Sl. No. 12(a) of Notification No. 25/2012 read with Section 102 of the Finance Act inserted with effect from 14.05.2016 whereby retrospective exemption from payment of Service Tax was granted to any taxab....
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....913 (S.C.)] is relied upon by the Ld. Advocate. 8.2 With regard to the demand on the liquidated damages, the Ld. Advocate would contend that the said issue has already been settled by the following orders of the CESTAT, in favour of the taxpayer, wherein the Benches have inter alia held that liquidated damages could at no stretch of imagination be covered under the definition of 'consideration' within the meaning of Section 2(d) of the Indian Contract Act, 1872: - i. Neyveli Lignite Corporation Ltd. v. Commissioner of Cus., C.Ex. & S.T. [2021 (53) G.S.T.L. 401 (Tri. - Chennai)] ii. Steel Authority of India Ltd., Salem v. Commissioner [2021 (7) TMI 1092 - CESTAT, Chennai] iii. South Eastern Coalfields Ltd. v. Commissioner of C.Ex. & S.T., Raipur [2021 (55) G.S.T.L. 549 (Tri. - Del.)] iv. M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. v. Principal Commissioner [2021 (2) TMI 821 - CESTAT, New Delhi] 8.3 Without prejudice to the above contentions, he would also contend that the Revenue was not justified in invoking the larger period since, primarily, the issue involved was one of interpretation of complex legal provisions; the appellant being a public sector undertaking, ther....
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....017 dtd. 17.05.2017 3. Demand on liquidated damages collected due to delayed supplies by job workers April 2015 to March 2016 14,78,844/- TOTAL April 2010 to March 2016 2,45,03,304/- 12. We find from the impugned Order-in-Original that there is no dispute as regards facts are concerned: the appellant's activity of re-engineering of sub-assembly of battle tanks being rendered wholly to the Government of India has been duly acknowledged vide paragraph 17.0 of the impugned Order-in-Original. There is no dispute that the appellant has even discharged the VAT, as applicable, on the entire transaction, as acknowledged vide paragraph 18.2 of the impugned order and there is also no dispute about the discharging of Service Tax liability from September 2014 onwards, as could be seen from paragraph 18.5 of the impugned order. 13.1 Admittedly, the appellant is engaged in the manufacture and supply of parts of tanks and other armoured fighting vehicles for the Ministry of Defence, Government of India, in respect of battle tanks deployed by the Indian Army. The appellant has taken shelter under Notification No. 63/1995-C.E. (Goods for defence purposes or other projects) dat....
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....ndustry or any other business or profession. * The meaning of 'original works' as per Rule 2A of the Service Tax (Determination of Value) Rules, 2006 includes commissioning of equipment. 14.2 From the above, what emerges is that a service, to be exempted, should be provided to the Government, even by way of repair, maintenance or alteration of, inter alia, any other original works and such service should not be consumed in a commerce, industry or any other business or profession. Here, admittedly, the alleged services of the appellant are provided to the Government, by way of repair / maintenance or alteration of of original works, but the same are definitely not consumed in a commerce, industry or any other business or profession, but exclusively for the Ministry of Defence and hence, we are prima facie satisfied that the scope of the alleged services gets covered under Sl. No. 12(a) ibid. itself. 14.3 The lower authority has rejected the claim of the appellant on the grounds, inter alia, that what was performed by the appellant was only a minuscule portion, which was nothing but refurbishing the equipment, which could not be considered as an original work. Sl. No. 12(a) of th....
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.... and consequently, the demand to this extent cannot sustain. 15.1 The second issue is the demand of Service Tax on the liquidated damages. We have gone through the following orders of various Benches of the CESTAT wherein the said issue has been settled in favour of the taxpayer: - i. Neyveli Lignite Corporation Ltd. v. Commissioner of Cus., C.Ex. & S.T. [2021 (53) G.S.T.L. 401 (Tri. - Chennai)] ii. Steel Authority of India Ltd., Salem v. Commissioner [2021 (7) TMI 1092 - CESTAT, Chennai] iii. South Eastern Coalfields Ltd. v. Commissioner of C.Ex. & S.T., Raipur [2021 (55) G.S.T.L. 549 (Tri. - Del.)] iv. M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. v. Principal Commissioner [2021 (2) TMI 821 - CESTAT, New Delhi] v. Bharat Heavy Electricals Ltd. v. Commissioner of G.S.T. & C.Ex., Tiruchirappalli [2023 (4) TMI 1196 - CESTAT, Chennai] (Final Order No. 40311 of 2023 dated 26.04.2023 - Service Tax Appeal No. 41500 of 2019 - CESTAT, Chennai) vi. Dy. GM (Finance), BHEL v. Commissioner of Cus. & C.Ex., Bhopal [2022 (9) TMI 1005 - CESTAT, New Delhi] (Final Order No. 50879 of 2022 dated 20.09.2022 - Service Tax Appeal No. 50080 of 2019 - CESTAT, New Delhi) vii. Bharat Heav....