TaxTMI 
TaxTMI 
2023 (10) TMI 590
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellant is not properly discharging Service Tax liability by claiming exemptions/ exclusions wrongly under Chapter V of the Finance Act, 1994. Further, it is the contention of the Department that the Appellant was short paying Service Tax on certain ongoing projects in terms of sub rule (2) of Rule 3 of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. 2.1 Accordingly, the Appellant was issued the periodical show cause notices which were confirmed by the Adjudicating Authority under different orders. The details of the show cause notices/OIO's/Appeals are as given below : Sl. No. Period SCN No. OIO No. Appeal No. Amount (Rs.) 1 01.06.2007to 31.03.2011 O.R. No. 120/2011-Adjn (ST) (Commr) dated 22.10.2011 OIO No. 11/2013- Adjn (ST) (Commr) dated 31.01.2013 ST/26383/ 2013-DB 24,08,46,851/- 2 01.04.2011to 31.03.2012 O.R. No. 75/2013-Adjn (Commr) (ST) dated 17.04.2013. OIO No. 97/2013- Adjn-ST(Commr) dated 21.11.2013 ST/20487/ 2014-DB 5,50,43,689/- 3 01.04.2012to 31.03.2013 O.R. No. 116/20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lause in clause (b) of the definition of works contract service." The ratio laid down after thorough analysis by the Larger Bench of the definition of the works contract service (WCS) hereinabove, would mean that any construction which is for non-commercial or non-industrial purposes, service tax liability under WCS will not arise. Further, the Hon'ble High Court of Bombay, had an occasion to address the clause ii(b) of section 65(105)(zzzza) of the Act, in the case of CCE & ST, Pune-III Vs. B.J. Shrike Construction Technology Pvt. Ltd., - 2019 (25) GSTL 8 (Bom)., wherein it was held that - 16. The language employed in the definition clause is clear and unambiguous. The plain meaning as can be understood from the definition clause, more particularly, the clarification contained in clauses (i), (ii), (iii) is that the construction ipso facto is not leviable to service tax, but it is only when it is used, or to be used, primarily for "commerce" or "industry" or work intended for "commerce" or "industry" that service tax can be levied.Thus, it is only that construction which is to be used or primarily to be used for commerce that is subject to levy of service tax. 17....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... * C.C.E. & S.T., Pune-III Vs. B.J. Shirke Construction Technology Pvt. Ltd. - 2019 (25) G.S.T.L. 8 (Bom.) * M/s. Punj Lloyd Ltd., Vs. Commissioner of Service Tax, New Delhi - 2019 (22) G.S.T.L. 85 (Tri. - Del.) 4.2 The objection of the department in written submission, that the Appellant has not submitted any documentary evidence issued by service recipient to show that the construction services are for non-commercial purposes, is little absurd, inasmuch as it is a settled law that what is obvious, need not be proved. It is widely known position that CWG-2010 was a sport event participated by the commonwealth nations, of which India is also one, for furtherance of sports and extending bilateral relationship between said countries, which was organized by the Commonwealth Organizing Committee and the Government of India. The construction of Sports Stadia and associated civil structures for CWG-2010 cannot be held as a commercial construction (primarily for the purpose of commerce or industry), by any stretch of imagination and are thus excluded from the ambit of 'works contract service' under Section 65(105)(zzzza) of Finance Act, 1994 and no Service tax liability....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l establishments in the said transport terminals, therefore, it is a civil construction primarily for commerce. Merely because there are facilities for passengers to purchase amenities or the fact that the bus terminals raise revenue by renting out such commercial spaces does not alter the character of the transport terminal to a commercial building. It still remains a transport terminal for use of general public and mere presence of some commercial spaces created for public convenience would not make the said civil structures primarily for the purposes of commerce and industry. 5.2 For the period prior to 01.07.2012, the 'transport terminal' is clearly excluded from the main part of the definition of 'works contract service' under section 65(105)(zzzza) itself, which reads as follows: "to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams" In the light of the clear exclusion of the construction services in respect of 'transport terminals' from the definition of 'works contract service', there cannot be any levy of Service ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he condition that the services were provided to governmental authority i.e., State Transport Corporations (any other body), which are set up by a Central Act, The Road Transportation Corporation Act, 1950. Clause 12(c) of Notification No. 25/2012-ST dated 20.12.2012 read with clarificatory amendment vide Notification No. 2/2014-ST dated 30.01.2014was examined and interpreted by the Hon'ble Patna High Court in the case of Shapoorji Paloonji& Company Pvt. Ltd. Vs. C.C., C. Ex. & S.T., Patna - 2016 (42) S.T.R. 681 (Pat.), wherein it was held as follows: "11. We have heard learned counsel for the parties and found the arguments raised by Mrs. Nivedita Nirvikar are not sustainable in law. The Governmental Authority as defined in the Notification dated 30th January, 2014, means an authority or a board or any other body set up by an Act of Parliament or State Legislature. The provisions contained in sub- clause (i) and sub-clause (ii) of Clause 2(s) are independent dis-conjunctive provisions and the expression "90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution" is related to sub-claus....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... built-up space by commercial entities does not detract from the essential purpose of such terminals and, traditionally, every bus terminal has outlets serving the passengers. In the absence of legislative intent or legislative delegation, an artificial delineation of space, at the discretion of tax authorities, is not acceptable. It is also specious to argue that absence or limits of security restrictions, unlike that elaborately designed, for obvious reasons at airports, should disentitle bus terminal from application as exclusion. Thus, 'terminals', such as the one impugned before us, are, in the absence of express legislative intent to limit application on the basis of scale of use or scale of access, within the ambit of exclusion from tax. 8. In view of the above, we find that the demand in the impugned order fails the test of law and must be set aside. The appeal is allowed." 5.6 Further reference is invited to the clarification sought by the Commissioner of Central Excise, Mysore Commissionerate vide C. No. IV/16/17/2009-HPU-ST dated 27.08.2009 sought for clarification regarding the taxability of Inter Model Transit Centre (IMTC) built by KSRTC, from the CBEC. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ensures that farmers are not exploited by intermediaries (or money lenders) who compel farmers to sell their produce at the farm gate for an extremely low price. (ii) All food produce should first be brought to a market yard and then sold through auction. Each state that operates APMC markets (mandis) establish their markets in different places within their territory, geographically dividing the state. Farmers are required to sell their produce via auction at the mandi in their region. Traders require a license to operate within a mandi. Wholesale and retail traders (e.g. shopping mall owners) and food processing companies cannot buy produce directly from a farmer. 6.1 The demand in respect of construction of APMC Markets for the period pre and post 01.07.2012. 6.2 The Appellant submits that the service provided for construction of sub-market yard is not for commerce or industry, but it is a facility provided to the farmers by the Government of Karnataka through APMC, which itself is not an organization functioning with profit as motive and thus go outside the purview of definition of 'works contract service' under section 65(105)(zzzza) of the Act, as it does not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le 2(k) of Cenvat Credit Rules, 2004. Therefore, it is clarified that the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-S.T." Circular No. 80/10/2004-S.T., dated 17-9-2004 ............................................. In view of above, the activities of APMC in respect of these contracts are not commercial in nature. Thus, these contracts are not covered under the purview of commercial and industrial construction service." 6.3 For the period post 1.7.2012 also the construction services of APMC markets is entitled to the benefit of Notification No. 25/2012-ST as amended by Notification No. 2/2014-ST, since the services were rendered to the Government of Karnataka and the APMC is a non-commercial statutory body. 6.4 The objections/grounds raised with regard to APMC in the additional submissions filed by the Revenue are general in nature, and in the light of the submissions and precedent rulings, there is no need for specific rebuttals for such objections/grounds. COMPOSITION SCHEME-Ongoing Projects [Appeal No. ST/30015/2016]: 7. In Appeal No. ST/30015/2016, the Appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Payment of Service Tax) Rules, 2007 is no longer in vogue and accordingly the payment for works contract services, have to be made in terms of Rules 2A of Service tax (Determination of Value) Rules, 2006 at the full rate on the 40% of the total value of contract (services). It is an admitted position in the impugned order that for the period from 1.7.2012 to 30.09.2014, there were only two ongoing projects viz., NGHC-Ranchi and NTPC-Noida. It is also admitted fact that the Appellant were discharging Service tax in terms of Rule 2A of Service tax (Determination of Value) Rules, 2006. The Ld. Commissioner, however, in the impugned order records that there is short payment of tax in respect of services rendered to NGHC- Ranchi to the extent of Rs. 7,04,639/- for the period July 2012 to March 2013 and Rs.7,10,971/- for the period from April 2013 to September 2014, with some unintelligible reasons, which the Appellant is unable to decipher and therefore are not in a position to counter. The Appellant, however, categorically denies the alleged short payment of tax and asserts that they paid the full and correct Service tax in terms of Rule 2A of the Service tax (Determination of Value) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....liability after completion of the investigation. In fact, the said amount deposited during investigation was appropriated in the impugned order at para 25(i), which is reflected at page 152 of Appeal No. ST/26383/2013. It is therefore submitted that the short payment of Service tax liability of Rs. 4 cores cannot be equated to evasion of tax, in order to invoke section 78 to impose equivalent penalty. In the absence of any of the ingredients of provisions of the said section, no penalty is imposable. 10. Since the demand of tax itself is not sustainable the demand of interest on the tax demanded and penalties imposed are also liable to be set aside. 11. Further urges, in the light of the above submissions, it is prayed that this Tribunal may set aside the impugned order in toto and allow the appeal, with consequential relief(s). 12. Learned AR for Revenue relies on the impugned order. 13. He further urges, as regards the issue of abatement under Notification No. 1/2006-ST, that the appellant had produced CA certificate dated 14.08.2015 wherein it is certified that no Cenvat Credit is availed on the projects. However, on verification of ST-III returns of the appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (SC)]. ii) JMC Projects (India) Ltd., Vs CST [2014 (36) STR 1223 (Guj)]. In this ruling, the Hon'ble Supreme Court held that in case of ongoing project prior to 01.06.2007 it was upon to the assessee to change the classification, provide or specify the option therefor. However, in the absence of option, composition scheme was not available. iii) Ahluwalia Contract (India) Ltd., Vs CST, New Delhi [2015 (38) STR 38 (Tri-Del)] Final Order dated 27.11.2014. 17. Having considered the rival contention, we find that so far construction of transport terminal is concerned, the same was exempt under the definition of works contract service under Section 65 (105) (zzzza), firstly, because the definition read with explanation (II) (b) specifically provides construction of a new building or civil structure primarily for purposes of commerce or industry. Further, the main definition provided the exclusion of transport terminals. Further, we find from 01.07.2012 as admittedly the service was provided to Government or Government Corporations, we hold the same are exempt under Clause No. 12 of Notification No. 25/2012-ST wherein clause - A provides for exemption of servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt or a Government Authority. 19.2 So far the issue of tax liability with respect to ongoing projects (which were started prior to 01.06.2007) when the head of works contracts was introduced in the Finance Act, view had been taken by the Revenue and also by some High Courts that in case of ongoing projects though the activity is classifiable under 'works contract service' with effect from 01.06.2007 however, the benefit of composition scheme cannot be availed. We find that the rulings being relied upon by the Revenue against the appellant are all prior to August, 2015 when the Apex Court held that in case of composite contracts, service tax cannot be demanded prior to 01.06.2007 under the existing heads of services like CCS, ECIS, CICS etc., as there was no mandate in the Act to bifurcate a composite contract and tax the service component. The Apex Court categorically held that prior to 01.06.2007 only simple contracts involving only service, and no deemed transfer of material can be subjected to service tax. Thus the issue of ongoing projects prior to 01.06.2007 stands settled by Hon'ble Supreme Court in the subsequent ruling of L & T in August, 2015. In the circumstances, as t....