TaxTMI 
TaxTMI 
2024 (1) TMI 1058
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....e works executed by the appellant was in the nature of false ceiling, partitions, flooring, modular systems, painting, carpeting, electrical connected works wall paneling, supply and fixing of various furniture, brick works etc. It appeared to the department that the works executed by the appellant would fall under 'Finishing and Completion work' coming under CICS, as described under sub-clause (c) of Section 25(b) of Finance Act, 1994. The Notification No. 1/2006-ST dated 01.03.2006 provides under column 4 that the abatement/ exemption shall not apply to in cases where the services are only completion and finishing services. The department was of the view that appellant is not eligible for 67% abatement, and has to discharge service tax on the entire gross amount charged by them. Further Notification No. 12/2003-ST dated 20.06.2003 (with effect from 01.07.2003) provides abatement/ exemption equal to the value of goods and materials sold by the service provider to the recipient of service subject to the condition that there is documentary proof for the value of materials and goods used. The appellant failed to produce documentary evidence and did not maintain any site wise/ bill wi....
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....of various sales made by them during the course of providing composite works contract services. 2.1 It has been alleged by department that the Appellant had undertaken the construction activity in the nature of constructing wall, false ceiling, partitions, floorings, modular systems, painting, carpentry, electrical fittings, interior finishing, supply and fixing of various furniture, plastering, bricks works etc., which are mere completion and finishing service activities and hence, not eligible for abatement benefit under Notification No. 1/2006-ST. However, the fact remains that the Appellant had actually undertaken substantial activity of construction, renovation, restoration and modification of civil structure. Be that as it may, the material consumption itself during such composite works contract activity was much more than 67% of the gross amount charged. The Appellant had provided works contract service, and even paid VAT, which is not in dispute in the present proceedings. The work undertaken by the Appellant is a composite work involving Service and material. In fact, approx. 78-80% of total contract value consists of the material purchase value itself, while balance 20-3....
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.... the works executed by the appellant are mostly in the nature of 'completion and finishing service' and the abatement is not eligible as per the above notifications. It is also alleged that appellant has not produced sufficient evidence to establish that materials and goods were used in the execution of work orders. For better appreciation, the definition of Commercial and Industrial Construction Services under Section 65(25(b)) of the Finance Act, 1994 with effect from 16.06.2005 is reproduced below:- (25b) "Commercial or Industrial Construction" means - (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is - (i) used, or to be u....
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.... 'Works contract service' they have failed to bifurcate and substantiate that portion of gross value for treating it on different footing. In Para 16, it is observed that 'Just because they purchased cement and steel on behalf of their customers, it does not mean that their service is also getting covered under Section 65(25b)[b] and [d]'. 5.3 From the above observations in the impugned order, it is clear that there is ample evidence to show that the appellant has used goods and materials in construction service which are composite in nature. So also, from the different work orders we have no confusion to conclude that these are not completion and finishing service so as to get excluded from the ambit of Notification No. 1/2006-ST. It also requires to be mentioned that the Tribunal in its earlier Final Order dated 02.07.2014, had remanded the matter with specific direction to the Adjudicating Authority to verify and scrutinize documents furnished by the appellant with regard to their claim of abatement in spite of such directions, the Adjudicating Authority has denied the benefit of abatement with observing that appellant has not produced details of site-wise/ bill-wise for the pu....
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....per the VAT Law. The value of transfer of property in goods has to be arrived at on the basis of purchase price of various goods, apportionment of overheads and profit margin. The appellant, being an assessee under the VAT Law, has to abide by the state law for payment of VAT. Thus, he can only arrive at the value of goods used in the Works Contract by applying the VAT Law after deducting the value arrived for payment of VAT; the remaining portion has been subjected to payment of Service Tax. When VAT has already been paid on the value of goods, the same cannot be subjected to levy of Service Tax again. ..... 8.1 The Hon'ble Apex Court in the case of M/s. Safety Retreading Co. (P) Ltd. Vs. Commissioner of C.Ex., Salem reported in 2017 (48) S.T.R. 97 (S.C.) has held that the assessee is liable to pay Service Tax only on the service component, which under the State Act was quantified at 30%. It was held that the assessee is not liable to pay Service Tax on the total amount for retreading including the value of materials/goods that have been used and sold in execution of the contract. 8.2 The Tribunal in the case of M/s. Singh Sales and Services Vs. Commr. of Cus., C.Ex. & S.T.,....
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....rce. 8. In the result, the appeal is allowed." The Tribunal in the case of Wipro GE Medical Systems P Limited - 2009 (14) STR 43 (Bang.) considered the issue and held that abatement is eligible on the cost of material used for Management, Maintenance or Repair Service provided by the assessee therein. The Tribunal held that appellant is eligible for abatement on the cost of materials. The relevant paragraphs reads as under:- "7. The learned Departmental Representative stated that the contract is only for the annual maintenance and the consideration received is only for the maintenance and repair. The replacement of spare parts is only incidental and there is actually no sale of the goods involved. Therefore, she supported the order-in-original and stated that the Order of the Commissioner is in accordance with law and the appellants are liable to pay service tax on the gross receipts. She also invited our attention to the Commissioner's order wherein he has relied on the Board's Circular dated 3-3-2006 according to which the appellants could have availed of the abatement only after producing the documentary evidence. She stated that there is actually no documentary evidence fo....