TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 379
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.... Delhi (hereinafter referred to as the 'Service Provider/ Party/ Assessee' working as sub-contractor has provided taxable services in respect of construction activities undertaken on behalf of M/s Larsen & Toubro Limited which may be classified as "Commercial or Industrial Construction" Services as per Section 65(105)(zzq) defined as per Section 65(25b) and "Works Contract Services" as per Section 65(105)(zzzza) of the Finance Act, 1994 (hereinafter referred to as the Act) ibid depending upon subcontract awarded by M/s Larsen & Toubro Limited and are getting amount in lieu of providing the taxable services but not paying service tax on the amount received from M/s Larsen & Toubro Limited. 2.1 Whereas, based on the LAR, vide Office letter of even No. 9352 dated 08.07.2011 and 13476 dated 25.11.2011 (RUD-I & II) the assessee was requested to furnish the details of gross amount received and service tax paid for the period 2007-08 to 2010-12. The assessee replied vide their letter dated 04.09.2012 which was incomplete and therefore the reply of the assessee was found inadmissible. Under the circumstances, the Department was left with no alternative but to issue a demand cum show cause....
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....ntract Services' as per Section 65(105)(zzzza) of the Finance Act, however they have not paid service tax on the amount received from M/s L&T Limited. According to the appellant he is engaged in providing machineries i.e. Transit Mixer on hire to M/s L&T Limited, sold Ready Mix Concrete (RMC) and also provided transportation of concrete direct to M/s L&T Limited to Delhi Airport Project Site in their own vehicles on which they were not liable to pay service tax under the Act. 5. The case of the Revenue is further that the appellant had failed to provide any information to make the assessment and therefore the show cause notice for the period following the one for which the show cause notice was envisaged was to be issued on identical irregularity for the period 2008-09 to 2011-12 on the basis of best judgement assessment under Section 72 (b) assuming 50% increase in value of the services provided as compared to the previous year. 6. The show cause notice dated 23.10.2012 was adjudicated by the Commissioner of CGST, Delhi (West). Learned Commissioner analysed the clauses of the agreement between the appellant and M/s L&T Limited and on that basis concluded that the final effective....
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.... On the issue of service tax on transportation of concrete, it is submitted that in case of Goods Transport Agency service (GTA), the service tax is levied on reverse charge mechanism in terms of Rule 2(1)(d)(b) of Service Tax Rules, 1994 on the service recipient or the person who has paid the freight. In support of his submission, he also contended that payment of service tax and VAT are mutually exclusive and referred to certain case laws. According to him, since he is already paying VAT on the hiring of Transit Mixer and on the sale of RMC, the demand of service tax is not sustainable. Learned Counsel also challenged the invocation of extended period of limitation, pleading that they were under the bonafide belief that the activities undertaken by them were not liable to service tax as they were paying VAT thereon and accordingly the penalty needs to be dropped. 8. On the other hand, learned Authorised Representative for the Revenue reiterated the findings of the Commissioner in the impugned order. Learned AR submitted that the appellant is working under self-assessment system and therefore they were duty bound to correctly assess the service tax liability and filed the return ....
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....service which may appropriately govern rendition of these services. In any event officers are not handicapped and the Act provides ample powers including of search under Section 82 of the Act to obtain information necessary to pass a proper, disciplined and legally sustainable adjudication order. The disinclination to employ the ample investigatorial powers conferred by the Act is illustrative of gross Departmental failure and cannot afford justification for passing an incoherent and vague adjudication order. The failure to gather relevant facts for issuing a proper show cause notice cannot provide justification for a vague and incoherent show cause notice which has resulted in a serious transgression of the due process of law." 11. Similar are the observations by the Ahmedabad Bench of the Tribunal in Indo Nippon Chemicals Co. Ltd., vs. Commissioner of C. EX. Vadodara, 2009 (16) STR 639, observing that law gives sufficient powers to officers to conduct enquiries and investigations to bring out the truth, and without making any efforts, on the basis of non-production of documents, on the basis of assumptions and presumptions, a case cannot be made out against the appellant which i....
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....completely ignored the provisions of law as well as the interpretation placed thereon by the judicial decisions resulting in absolutely vague show cause notice. 13. We are accordingly of the view, that the department cannot take shelter on account of failure of the appellant to produce and supply the documents, and it was incumbent upon them to have ascertained the actual nature of the services for the purpose of levying the service tax under the respective clause. The contents of the show cause notice as referred above, only stated that the appellant working as sub-contractor provided taxable services in respect of construction activities, undertaken on behalf of M/s L&T Limited which may be classified as "Commercial or Industrial Construction Services" as per section 65 (105) (zzq) as defined in section 65(25b) and "Works Contract Service" as per section 65 (105) (zzzza) of the Finance Act. We have no hesitation in holding tht the show cause notice needs to be quashed being vague. 14. The other aspect is that the impugned order is not sustainable on account of the fallacy in the approach of the Commissioner in going beyond the scope of the show cause notice. As stated by us abo....
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....unnels, dams, etc., it would not automatically lead to the classification of services being provided by the sub-contractor to the Contractor as WCS. 16. This issue of classifying the supply of "Transit Mixer" on hire is squarely covered by the decision of High Court of Andhra Pradesh in G.S. Lamba & Sons vs. State of Andhra Pradesh, 2015 (324) ELT 316 (AP), where the learned Division Bench in view of the principle to construe the document as a whole, considered the various clauses of the agreement in that case and concluded that supply of transit mixers was transfer of the right to use transit mixers. Para 45 of the judgment is quoted below : "45. Reading the recitals and various clauses, indeed there is a transfer of the right to use Transit Mixers. All the tests as indicated hereinabove exist in the contract between the petitioners and Grasim. The vehicles are maintained by the petitioners. They appoint the drivers and fix their roster. The licences, permits and insurances are taken in their names by the petitioners, which they themselves renew. The Transit Mixers go to Grasim's batching plants in Miyapur and Nacharam, where they are loaded with RMC and then proceed to the con....
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....hat if under the terms of the contract, under which there was a transfer of the right to use, that it was held that since the effective control of the machinery, even while the machinery was in the use of the contractor, was that of the company that had given the machinery on hire, sales tax could not have been charged from the appellant under the provisions of the State Sales Tax Act. Further, taking note of the circular dated 29.2.2008 and also the earlier circular dated 23.8.2007, the Tribunal held that the supply of diesel generator sets to the customers would not amount to supply of tangible goods use service. 18. In view of the decisions discussed above, we need to examine the facts of the present case particularly the terms of the contract so as to determine whether the appellant had rendered any service to M/s. L&T by giving transit mixers on hire or has transferred the "right to use goods". The learned Commissioner in the impugned order, on perusal of the agreement observed as : "(a) It was mentioned at S. No. 4 of Agreement that, the operating crew would be provided by noticee for this transit mixer. (b) It was further mentioned at S.No. 8 of Agreement that the respo....
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....he time and place as instructed by the officials of L& T. On going through the various clauses of the agreement, we find that the full control of the transit mixers, i.e., on the method, manner, and time of using them is absolutely vested in M/s L&T. The appellant had not rendered any service to L&T by providing the transit mixers on hire rather have transferred the right to use goods to L&T chargeable to VAT only. 19. Reliance placed by the revenue on the decision in Greatship (India) Ltd., (Supra), is misplaced as after considering the terms and conditions of the contract there, it was held that appellant had possession and effective control over the drilling rigs, the crew so supplied were the employees of the appellant and not of ONGC and the consideration was paid on per-day basis. 20. The activity of supplying the RMC by the appellant on which he has paid VAT, considering it to be a sale transaction has been considered earlier by this Tribunal in the case of GMK Concrete Mixing Pvt. Ltd., vs. Commissioner Service Tax, Delhi, 2012 (25) STR 357, where the Principal Bench held that the appellant was engaged in preparation of Ready Mix Concrete (RMC) and while carrying out such....