TaxTMI 
TaxTMI 
2024 (1) TMI 680
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....722/- For the sake of convenience, we will take up the facts of appeal no. ST/673/2012 wherein the Commissioner has confirmed the demand of service tax amounting to Rs. 56,89,867/- under proviso to Sub-section(1) of Section 73 of Finance Act against the appellant along with interest and equal penalty under Section 78. Ld. Commissioner has also imposed penalty of Rs. 5,000/- under Section 77 of the Act and also imposed penalty under Section 76 of the Act. 2. Briefly the facts of the present case are that the appellant are engaged in the construction of Residential/Commercial Complexes on contract basis in respect of government departments/Civic authorities and private agencies. The Construction services and construction of residential complex services were brought under the service tax net w.e.f. 10.09.2004 and 16.06.2005 respectively. It appears that the appellant contravened the provisions of Section 67,68,69 and 70 of the Finance Act, 1994 read with Rule 4,6 &7 of the Service Tax Rules, 1994 by not paying the service tax at the prescribed rate and by not furnishing the periodical ST-3 returns to the department as prescribed under law, in respect of the said services. On these a....
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.... wherein the Tribunal after relying upon the decisions of the Hon'ble Apex Court in the case of Commissioner of C.Ex & Cus. Kerala Vs. Larsen & Toubro Ltd. reported in 2015 (39) S.T.R. 913 (S.C.). He further submitted that even after 01.06.2007 service tax cannot be demanded under the category of residential/complex service and this issue has also been settled by the various decisions of this Tribunal. In support of his submissions, he relied upon the following decisions: * M/s Srishti Consturction Vs. Commissioenr of Central Excise and ST, Ludhiana reported in 2017 (12) TMI 172-CESTAT, Chandigarh. * Real Value Promotors Pvt Ltd Vs. Commissioner of GST and Central Excise, Chennai reported in 2018-TIOL-2867-CESTAt-MAD. * India Guniting Corporation Vs. Commissioner of Central Tax, New Delhi reported in 2021 (52) G.S.T.L. 174 (Tri.-Del.). * Ashwini Apartments Vs. Commissioner of GST & C.Ex. Chennai South reported in 2019 (31) G.S.T.L. 476 (Tri.-Chennai). * SMS Gardens Pvt. Ltd. Vs. Commissioner of GST& Central Excise, Salem reported in 2022 (61) G.S.T.L. 33 (Tri.-Chennai). * Kishorekumar Gokaldas Developers & promoters Vs. Commissioner of GST & C.Ex. Chennai South repor....
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....ence by such person. the purposes of this clause, Explanation. For the removal of doubts, it is hereby declared that for (a) "personal use" includes permitting the complex for use as residence by another person on rent or without consideration; (b) "residential unit means a single house or a single apartment intended for use as a place of residence;" 7.4 The taxable service of works contract was introduced with effect from 1.6.2007 by insertion of section 65(105)(zzzza), The Explanation to the said provision also contained the definition of "works contract" Section 65(105)(zzzza) read as under:- "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. Explanation. For the purposes of this sub-clause, "works contract means a contract wherein, (1) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabrica....
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....ction 65(105)(zzh) ibid, 'construction services' under section 65(105)(zzq); construction of complex services under section 65(105)(zzzh) would refer only to service contracts simpliciter and not to composite works contracts; that these five taxable services only would qualify without any other element. The Hon'ble Supreme Court also observed that with Introduction of works contract service as a separate taxable service, statutory mechanism to exclude the value of transfer of property of goods has been prescribed. The Apex Court held that since the Finance Act had not laid down any charge or machinery to levy and assess service tax on indivisible works contract prior to 1.6.2007, the levy on such composite works contract prior to that date has no constitutional validity. 7.6 The Larsen & Toubro (supra) judgment has been followed by this Tribunal in many numbers of cases to set aside the demand of service tax on services like commercial or industrial construction service. construction of complex service etc. involving composite contract of both material supply as well as service element prior to 1.6.2007. 7.7 In the present appeal also, there is no dispute that the ....
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....ition of works contract service. 7.9 At this juncture, it is worthwhile to reproduce excerpts from the Union Finance Minister's budget speech in 2007- "State Governments levy a tax on the transfer of property in goods involved in the execution of a works contract. The value of services in a works contract should attract service tax. Hence, I propose to an optional composition scheme under which service tax will be levied at only 2 per cent of the total value of the words contract". 7.10 The issue was analyzed by the Hon'ble Apex Court in Larsen & Toubro case (supra) and held that there can be no levy of service tax on composite contracts (involving both service and supply of goods) prior to 1.6.2007. This read together with the budget speech as above would lead to the strong conclusion that composite contracts were brought within the ambit of levy of service tax only with effect from 1.6.2007 by introduction of Section 65(105)(zzzza) ie. Works Contract Services. As pointed out by the id. counsels for appellants, there is no change in the definition of CICS/CCS/RCS after 1.6.2007. Therefore only those contracts which were service simpliciter (not involving supply of ....
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....ice that the said findings of the adjudicating authority that the appellant is eligible for abatement of 67% of the value of the goods is in itself the acceptance of the fact that the contracts were executed with material. It is also on record that the Revenue has not contested these findings of the adjudicating authority before the Tribunal. If that be so, even when the Revenue authorities are accepting the facts that the contracts executed by the appellant are nothing but works contracts, for the period in question, entire case of the Revenue in the show-cause notice stands demolished by the Apex Court in the case of Larsen & Toubro Ltd. (supra). In the said judgment, their Lordships have very categorically laid down the law that the works contract cannot be vivisected for the confirmation of demand under various other services. On this ground itself, the entire demand confirmed by the adjudicating authority is liable to be set aside and we do so." c. In the case of URC Construction (P) Ltd. Vs. Commissioner of Central Excise, Salem-2017 (50) STR 147 2017-TIOL-1214-CESTAT-MAD, the Tribunal in paragraphis 9, 10 and 11 has held as under:- "9. The Hon'ble Supreme Court in re ....
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.... to be invoked only for construction simpliciter. Therefore, there is no scope for vivisection to isolate the service component of the contract." d. In the case of Logos Construction Pvt. Ltd. Vs. Commissioner of Central Excise as reported in 2018 (6) TMI 1361 = 2018-TIOL-2716-CESTAT-MAD, the Tribunal has held as under:- "5.1 The payment upto 01.06.2007 will get extinguished on account of the law that has been laid down by the Apex Court in the case of Larsen & Toubro Ltd., (supra), relied upon by the Ld. Counsel. So ordered. 5.2 The Ld. Counsel has been at pains to point out that on-going projects which were only in the nature of works contract prior to 01.04.2007 cannot be brought under different category of Construction Services and CICS subsequently. We find merit in his arguments. The SCN has proposed demand of service tax liability only under these two categories and not under Works Contract service. The demand confirmed in the impugned order under these categories namely under construction service for the period 10.09.2004 to 16.06.2005 under CICS for the period 16.06.2005 to 30.09.2008 cannot also sustain and are therefore set aside. So ordered. 5.3 For the perio....
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....orks contract, under 'Commercial or Industrial Construction Service' or Construction of Complex Service, cannot therefore sustain. In respect of any contract which is a composite contract, service tax cannot be demanded under CICS/CCS for the periods also after 1.6.2007 for the periods in dispute in these appeals. For this very reason, the proceedings in all these appeals cannot sustain. 9. The next issue that arises for consideration is with regard to the demand raised for the reason that appellants did not intimate the department about their intention to opt for payment of service tax under composition scheme under Works Contract Service. The Tribunal vide Final Order No. 50871/2018 dated 6.3.2018 in the case of Vaishno Associates Vs. Commissioner of Central Excise = 2018-TIOL-1486- CESTAT-DEL had occasion to consider this issue and held for sole reason of not filing the intimation opting to pay service under Works Contract Service, the demand cannot sustain. Similar view was taken in Bridge & Roof Co. Ltd. Vs. Commissioner of Central Excise, Jaipur vide Final Order No. 58254 & 58255/2017 dated 1.12.2017 - 2018-TIOL-309-CESTAT-DEL. Following these decisions, we answer ....