AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 231
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....dertaking works contracts for large projects involving service and sale of goods as works contracts. 2.1 The Aravali Power Corporation Private Limited (APCPL) and Damodar Valley Corporation (DVC) invited global tenders for erection, construction, installation of Coal Handling Plants at various locations. The appellant participated in the International Competitive Bidding and was awarded two contracts each by APCPL and DVC and one for sale of plant and equipment and one for services in the nature of works contract for civil works, structural works, installation etc.. 2.2 Under the sale contract, the property in the goods were transferred to APCPL and DVC at the time of handing over the goods to the transporters and thereafter, those goods were handed over to the appellant free of cost by APCPL and DVC for providing services with respect to those goods, which also included transfer of property in certain other goods used by the appellant while rendering services under Contract II qualifying this contract as a "works contract". 2.3 As per the terms of agreement, the appellant was required to execute two separate contracts, i.e. Contract I & Contract II. 2.4 The execution of two se....
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....correct position in law. Non-mention of tax amount in the invoice was due to the contract terms specifying that all tax liabilities shall be borne by the appellant. In any case, disclosing of tax amount on the invoice does not decide whether the transaction is sale or not. In any case, this basis adopted in the impugned order was beyond the allegations in the impugned show cause notices. 3.2 He further submitted that the appellant has opted to pay service tax under Rule 3(1) of the Composition Scheme which stipulates that notwithstanding anything contained in section 67 of the Act and rule 2A of the Service (Determination of Value) Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to 2%, 4% or 4.8% on the gross amount charged for the works contract. It is provided by way of an explanation that for the purposes of this sub-rule, gross amount charged for the works contract shall inter alia be the sum, including the value ....
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....07.2009 and invoices were raised or payments were received. Therefore, in terms of Rule 3(1) of the Composition Scheme vide Notification No.150/1/2012-ST dated 08.02.2012, the value of Contract I cannot be included for determination of gross value for payment of service tax under the Composition Scheme. To support, he relies on the following decisions : a) Essar Projects (I) Ltd vs CCE - 2014 (33) STR 696 (T) b) Tata Projects Ltd vs CST - 2019 (2) TMI 1037 - CESTAT Hyd c) CCE vs Kalpataru Power Transmission - 2021 (48) GSTL 354 (T) Therefore, he prayed that the impugned order is to be set aside and the appeals be allowed. 4. On the other hand, the ld.A.R. for the Revenue supported the impugned order and submits that the appellant has entered into two separate contracts to avoid the payment of service tax on gross value of services provided and supplied by them, therefore, the value of goods sold under Contract I is to be added to the value of goods sold under Contract II for payment of service tax liability under the Composition Scheme. 5. Heard both sides and considered the submissions. 6. We find that the facts are not in dispute. The agreements were entered by the a....
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...., 2009." Where execution of works contract has commenced prior to 7-7-2009 or where any payment (except payment through credit or debit) has been made towards a works contract prior to 7-7-2009, then in those cases 'gross amount' for the purpose of payment of service tax does not include the value of free of cost supplies. 4. The above clarification may be communicated to the field formations and service tax assessees through Trade Notice/Public Notice. Hindi version to follow." As per the said Circular, the explanation has been appended to Rule 3 (1) of the Composition Scheme, which clearly shows that the contract entered prior to 07.07.2009, the value of cost of free supply will not be includible to determine the gross amount for the purposes of payment of service tax. 7. The same view has been taken by this Tribunal in the case of Essar Projects (India) Limited (supra), wherein this Tribunal has observed as under : "9.1 It is clear from the above Circular issued by C.B.E. & C. that where execution of works contract has commenced prior to 7-7-2009, in those cases gross amount, for the purpose of payment of Service Tax, will not include the free of cost supply by the servi....
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....ave been) determined by taking into consideration the lumpsum of 15 million French Francs (nearly three crores of Rupees) paid by the respondents to the foreign collaborator under the agreement. It is on this basis Section 14(1)(a) was excluded and resort to Section 14(1)(b) of the Customs Act was sought to be justified by the revenue. In appreciating the above plea we have to bear in mind certain basic principles. The bargain between the respondents and the foreign collaborator is evidenced by written agreements, (dated 6-11- 1979 & 6-3-1980). There is no material nor was it suggested that the dealings between the parties are not at arm's length. No evidence is available to show that the payment of royalty to the collaborator induced any extra commercial obligation for the price of CKD packs, parts and components. Ordinarily the Court should proceed on the basis that the apparent tenor of the agreements reflect the real state of affairs. It is, no doubt, open to the revenue to allege and prove that the apparent is not the real and that the price for the sale of the CKD packs is not the true price, and the price was determined by reckoning or taking into consideration the lumpsum p....
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....r the supply was completed, the goods which were supplied were given by APPDCL back to appellant for execution of the contract. A plain reading of CBEC circular D.O.F. No. 334/13/2009-TRU, dated 06.07.2009 explains that such values became includible in the value of the works contract as per the amendment made vide notification NO. 23/2009-ST, dt. 07.07.2009. By inserting an explanation, it was also clarified by CBEC themselves that the inclusion of the values would not apply to such contracts where either the execution of works contract has already started or any payment (whether in part or in full) has been made on or before 07.07.2009. In this particular case, the payments in respect of all the three contracts were made prior to 07.07.2009. Needless to say that there is no separate payment under the umbrella contract because it was only a combination of the other three contracts. This issue was agitated by the appellant before the adjudicating authority who, however, did not agree with this contention on the following words: " 7.1. The issue required to be decided in these proceedings is whether the contracts dated 12.08.2009 with service recipients, commenced before and payme....