TaxTMI 
TaxTMI 
2024 (4) TMI 628
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....12 to Mar 2013 28,27,737 27.02.2015 08.01.2018 Apr 2013 to Dec 2013 29,55,754 3 12959/2018 19.01.2015 Jan 2014 to Oct 2014 11,76,717 09.11.2015 13.08.2018 4 10302/2019 02.05.2016 Nov 2014 to Dec 2015 8,54,317 27.03.2017 27.11.2018 Total 5,79,17,675 1.1 The brief facts of the case are that the Appellant is engaged, inter alia, in the manufacture of cooling towers and parts. The Appellant also provides consulting engineers, maintenance & repairs, erection, commissioning and installation services, works contract services etc. The Appellant is registered with the department under excise registration No. AAACT2254QXM001 and as service provider vide registration number AAACT2254QST002.The Appellant either enters into three types of contracts for supply of parts of cooling towers or executes works contract for erection, installation and commissioning of cooling towers at their customer's site, the details whereof are as follows:- (i) Type 1-Order for supplying of cooling towers a....
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....ellant to its customers on the goods purchased from independent suppliers and supplied to the customer's site. Consequently, a demand of service tax was made on the profit margin, i.e., the difference in the sale price and purchase price of the subject goods. 1.4 Pursuant to the above, show cause notices were issued to the Appellant, demanding service tax on the said price differential in respect of the goods sourced from independent suppliers and supplied to the customer's site. It was alleged that the said supply of goods is a part of the works contract carried out by the Appellant. The Ld. Adjudicating Authority vide its Orders-in-Original confirmed the demand for service tax along with interest and penalties. Further, the Ld. Commissioner (Appeals) also upheld the demand for service tax along with interest and penalties. 1.5 Hence, the present appeals. 2. Shri Prakash Shah Learned Counsel with Shri Mohit Rawal Advocate appearing on behalf of the appellant made the following submission:- THE SHOW CAUSE NOTICES ISSUED FOR THE PERIOD FROM OCTOBER 2012 TO DECEMBER 2015 INVOKE INCORRECT PROVISIONS 1. It is submitted that the show cause notices issu....
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....llation. There is no service element involved and it is a transaction involving pure sale of goods. Further, since mere sale of goods is not covered by the above third condition, the said contract cannot be held to be a works contract. 9. Contract Type 2 involves two separate purchase orders, one for sale of cooling towers and second for erections, commissioning and installation, which are independent to each other. Thus, the contract is not a singular transaction of works contract but involves two separate transactions of sale and installation. 10. In Contract Type 3, although a single purchase order is involved, the value for supply of goods and erection, installation and commissioning is separately indicated. Thus, the subject transaction is not singular and indivisible but instead involves two distinct values, one for sale and other for service. 11. In this regard, it is pertinent to note that the Appellant has discharged the appropriate excise duties (where self-manufactured) and sales tax / VAT/CST on the value of goods supplied to the customer and has discharged service tax on the value of services involved as distinctly identified in the purchase ....
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....uilding Systems Pvt. Ltd. v. Commissioner of Commercial Taxes [2022 (63) GSTL 257 (SC)], 21. In the present case, even assuming that the contracts under dispute are indivisible works contracts, the value of property in goods transferred under the contract is separately available. 22. It is submitted that the Appellant having discharged service tax on the service portion of the contracts, i.e. on the said contract value as reduced by the value of goods transferred, has applied the valuation mechanism prescribed under Rule 2A(i) of the Valuation Rules. 23. Thus, the Respondent/Ld. Commissioner (A) has erred in confirming the demand of service tax on the value of goods supplied by the Appellant to the customers under the subject contracts. THE SAME TRANSACTION CANNOT BE SUBJECT TO BOTH SERVICE TAX AND VAT 24. In any event, it is submitted that the Appellant has discharged the VAT/CST /Sales Tax liability on the sale value of the goods supplied to its customers and thus, the same cannot be subjected to service tax again. He placed reliance on the following judgments:- Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes [20....
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....f the Act cannot be invoked in the present case and thus, the first show cause notice dated 22.10.2012 covering the period from April 2007 to October 2011 is barred by limitation 33. It is submitted that the Appellant has not suppressed any information from the department. Admittedly, the entire demand is based on the information procured from the financial statements of the Appellant and thus, there is no question of any suppression on the part of the Appellant. 34. In any event, it is submitted that the issue pertaining to the value of taxable service and levy of service tax in respect of works contract has been a subject of various conflicting decisions of the Hon'ble Supreme Court as well as the Hon'ble High Courts and is thus a highly interpretational issue Thus, extended period of limitation cannot be invoked in the facts and circumstances of the case and the demand raised in the first show cause notice is barred by limitation. 35. The Appellant also submits that in the absence if any wilful suppression, and contraventions of provisions of Central Exe Act, 1944, CCR and other allied rules, penalty under Section 78 of the Act is not imposable....
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.... supply therefore the transfer of property in the goods has already taken place at the time of receipt of the goods by the service recipient accordingly at the time of the execution of the service i.e. erection commissioning and installation it is not the case that the transfer of the property goods is involved in the execution of such contract as the transfer of property has already taken place before execution of the contract. In the present case the contract of the service namely erection, commissioning, installation service being a pure service the same is not exigible to Sales Tax, VAT/CST etc. as per the law therefore the condition Number 2 above is also not applicable therefore in the present case being a service simpliciter as per the separate contract the same is not classifiable under works contract service. The appellant have admittedly paid the service tax on the erection, commissioning, and installation at the applicable rate of service tax therefore the allegation of the department that the appellant have not included the value of goods in the works contact service is incorrect. 4.2 This issue has been considered by the Hon'ble Supreme Court, in BSNL v. Union o....
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....ts in that it bifurcates a composite indivisible works contract and takes care to see that no element attributable to the property in goods transferred pursuant to such contract, enters into computation of service tax. 4.8 Further considering the aforesaid Apex Court judgment in the case of Larsen & Toubro Ltd. in the case of Total Environment Building Systems Pvt. Ltd. v. Commissioner of Commercial Taxes (Supra), the Hon'ble Supreme Court, on the principle of stare decisis, expressed a firm view that the judgment in the case of Larsen and Toubro Limited (supra), neither needs to be revisited, nor referred to a Larger Bench of this Court as prayed for by the revenue. 4.9 For the above reason also the value of goods included in the gross value of the service. we further submits that in any event there is no dispute that the appellant has discharged the VAT/CST/ Sales Tax liability on the sale value of the goods supplied to its customers and thus the same cannot be subjected to the service tax again. In this regard the Hon'ble Supreme Court in the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes (Supra), the Hon'ble Supreme Court has categorically h....