TaxTMI 
TaxTMI 
2025 (4) TMI 1538
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....e invoices of 85 percent, claimed as being towards the goods and on the remaining value of 15 percent, they were discharging service tax. The percentage of 85 percent was stated by the respondents to be in accordance with the contracts entered by them. Multiple Show Cause Notices were issued from time to time to the respondents during the impugned period. While remanding matter, this tribunal gave following direction to the Commissioner (Appeals) vide order No. A/11183/2014 dated 03.07.2014 through the following observations: "5...........As per Rule 2A (ii) of the Service Tax (Determination of Value Rules, 2006, the actual value of transfer of property in goods involved in execution of works contract Is not to be taken into consideration while discharging service Tax liability under the Works Contract is not to be taken into consideration while discharging Service Tax liability under the Works Contract Services. It is the claim of the appellant that VAT/ Sales Tax was paid on the actual material value of the material sold, as per audit account furnished to the adjudicating authority and on examination of the records, it seems to be so. However, this matter whether VAT/ Sa....
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....h appears to be incorrect. Though there is no provision in the law to discharge the duty/tax on average value basis, an attempt has been made to ascertain the authenticity of the said certificate based on the figures available in the Financial Statements of M/s Trio, which is tabulated herein below:- S. No Financial Year Total Value of Supply & Installation Value of material transferred Percentage 1. 2007-2008 Financial statements not available 2. 2008-2009 20,86,50,393 16,44,49,639 78.82 3. 2009-2010 21,11,82,558 16,73,61,487 79.25 4. 2010-2011 27,79,43,253 21,55,29,003 77.54 5. 2011-2012 44,42,14,992 40,04,97,935 90.16 6. 2012-2013 66,88,89,118 54,09,72,250 80.88 7. 2013-2014 54,43,86,433 40,65,99,136 74.69 8. 2014-2015 54,43,86,433 34,27,44,825 70.00 9. 2015-2016 74,16,09,303 54,79,31,030 73.88 10. 2016-2017 Financial statements not available 3.1 The above tabulation clearly demonstrates that the value of materials involved in the supply portion of contract as arrived at by M/s Trio was far lesser than 85% except for the fina....
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....omposite contract when there was no evidence of sale of material in rendering service of maintenance and repair, the gross value would be taken as a value of service. However, when the matter was agitated before the Hon'ble Supreme Court, it concluded that if under the State Legislation 70% was taken as the cost of material and tax discharged on that, the balance 30% could be taken as service component. It is clear that when the decision was taken, neither in the Finance Act, 1994 or in notifications thereof, separate rates of deemed service component was provided for. However, since 2004, vide Notification No. 15/2004-ST and thereafter through various amended notifications as well as Service Tax Valuation Rules segregated components towards goods and services came to be provided and even the Composition Scheme under various provisions of Finance Act,1994 was introduced for the tax payer to avail. While, D.O.F 334/1/2007-TRU dated 28.02.2007, it was provided that value of the service provided can be either arrived at, on the basis of records maintained by the assessee or it was allowed to pay 2% on the total value of work contract as service tax with no CENVAT credit. In the instan....
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....upply of labour and services; (vii) other similar expenses relatable to supply of labour and services; and (viii) profit earned by the service provider relatable to supply of labour and services; (ii) Where Value Added Tax or sales tax, as the case may be, has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then such value adopted for the purposes of payment of Value Added Tax or sales tax, as the case may be, shall be taken as the value of transfer of property in goods involved in the execution of the said works contract for determining the value of works contract service under clause (i). Similarly, Section 2A(ii)at the relevant time provided that "(ii) Where the value has not been determined under clause(i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:- (A) in case of works contracts entered into execution of original works, service tax shall be payable on forty per cent of the total amount charged for the works contract; (B) in....
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.... period prior to 2004, when specific percentage of service component was not provided for in the Finance Act,1994 or its notifications, but only percentage under the State Tax legislation existed, the Hon'ble Supreme Court held that on inadequate proof of the goods component in a composite contract not being available, taxing gross value under service tax may not be proper and it was appropriate to take into account the notional percentage under state legislation and adopt the percentage as taken in the state legislation to be the portion of goods and to treat balance as service related portion even under Service tax. Point of emphasis is that in the dynamics of service tax at the relevant time, there was no prescribed percentage for service component in Finance Act, 1994. The choice only existed between gross value or actual value based on documentary evidence. In the matter of Johnson case (cited supra), while following decision of the Apex Court, the coordinate bench considered that the percentage of 85% under Tamil Nadu Value Added Tax legislation being goods portion and 15% balance being service tax portion was sufficient and proper. The decision however, did not throw light o....
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....n (c) of Clause (i) where value added tax has been paid or is payable on the actual value of property in goods transferred in the execution of works contract the same shall be taken into account for determining the value of the works contract on which service tax has to be paid and the actual value is not available from the records. According to the Revenue, the value should be determined as per the clause (ii), which also, like the Tamil Nadu VAT Act and Rules, lays down a proportion of the consideration for the indivisible works contracts on which service tax should be paid. Since the works in this case were not original works, it falls under category B of clause (ii) of this Rule and service tax should be paid on 70% of the value of the works contract. In other words, if the Revenue's argument is accepted, the appellant will have to pay service tax on 70% of the gross amount charged for the works contract and the appellant has already paid VAT on 70% of the gross amount charged as per the Tamil Nadu VAT Act. This will lead to an anomalous situation where the appellant has to pay VAT as well as service tax on 40% of the total value of the works contract. On identical situation th....
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....rder- in- original is sustainable in view of the decision of Johnson Pvt Vs. Central excise (Chennai IV) reported at 2018 (6) TMI 384 CESTAT-Chennai of the coordinate bench, including that of Touchstone infrastructure and Solutions Pvt. Ltd v/s CCE, Salem reported in 2021(11) TMI695 . 8. Departmental appeal is accordingly dismissed. RAJU 9. I have gone through the order of Learned Member (Judicial). I am unable to agree with the arguments and conclusion made therein. 10. The present appeal has been filed by Revenue. The issue involved in the instance case is the determination of value of Services provided by the respondents. The respondents were discharging VAT/Sale Tax on certain amount claimed as value of goods sold in their invoices. In the invoices, the respondents were showing that 85% of the total price recovered by them as value of goods and the balance amount of 15% was apportioned to value of services. The matter had earlier reached Tribunal wherein the appellant had contended that the value showed in their invoices are actual values of the goods sold on which VAT/Sale Tax has been paid. The revenue at the material time had contended before the Tribunal that th....
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....s contracts and are composite ones which cannot be vivisected into value of the services provided and the value of the materials sold. It was his case that 15% value of the contract taken for the purpose of payment of Service Tax is not on actual basis and cannot be taken as proper value for discharge of Service Tax liability and Service Tax was required to be paid upon the gross value of the contract including the value of the materials supplied for which separate value is not available in the contracts. It was also his case that certain clauses in contract clearly convey that contracted value cannot be vivisected into material portion and the service portion. 5. Heard both sides and perused the case records. As the issue involved in the present proceedings lies in narrow compass, therefore, after allowing the Stay Petition, appeal itself is taken up for disposal. The appellant, inter alia, is providing erection, commissioning & installation services on which Service Tax is paid on 15% of the total contracted value which as per the appellant is proper discharge of Service Tax and the remaining 85% of the contract value represent supply of materials on which VAT/ Sales Tax....
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....at the respondent has not challenged the classification of service under the head of Works Contract service. The Commissioner in the impugned order has examined the valuation of goods for the period 2007-08 to 2011-12 in the context of the following three options for discharging Service Tax liability as follows: (i) Rule 2A of the Service Tax (Determination of Value) Rules, 2006, (ii) Works Contract (Composition Scheme) Rules, 2007, (iii) Notification No. 12/2003-ST, dated 20.06.2003. 12. The impugned order recognizes that deduction of the actual value of goods can be allowed in terms of Rule 2A of Service Tax (Determination of Value) Rules, 2006. It also highlight that both sides agree to that principle. The impugned order further observes as follows: "88. In the present case, no separate invoices have been issued by the assessee, for the transfer of property or sale of goods on which VAT has been paid. No details regarding separate amount for the value of goods and separate amounts for the value of service have been shown in the invoices. The assessee has themselves chosen to pay VAT on lumpsum 85% of the billing amount, which was not accept....
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....lleged that they have artificially bifurcated the contract value into material and service portion in the ratio of 85% and 15% respectively. This bifurcation is also not disputed by the assessee. However, they have contended that they have paid VAT on 85% value of the contracts, which has been accepted by the VAT department and therefore on the remaining 15%, service portion, they have appropriately paid service tax." (Emphasis Supplied) 13. Thereafter after examining the decision of Hon'ble Apex Court in the case of Larson & Toubro Ltd., -2005 (39) STR 913(S.C) impugned order holds as follows: "92. I hereby rely on the above judgment of the Hon'ble Supreme Court, above, wherein it has been held that in case of composite indivisible works contract, no element attributable to property in goods is transferred pursuant to such contract, enters into computation of Service Tax. 93. Further, from the above discussion, it is evident that statute stipulates that no Service tax can be recovered on the materials used in-the execution of the Contract on which VAT / Sales tax has been paid. CESTAT, vide its order No. A/11183/2014, dated 03/07/2014, in this mat....
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.... 2008-09 to 2011-12, obtained pursuant to an independent study by M/s. Kantilal Patel & Co., dated 23.1.2012, Chartered Accountant has been produced by the assessee. 95. Further, vide their letter dated 27.01.2020, the assessee has submitted a detailed report issued by M/s. P.D. Modh& Associates, Cost Accoutants, certifying the actual cost of materials supplied and the value of service provided in their contracts. Vide this Certificate, the Cost Accountants have interalia certified as under: (1) All contracts for supply and erection of elevators, enetered into with its customers, by TRIO, have the following two disctinct elements for which separate pricing is provided in the contract itself: a. Supply b. Service (2) In each of the contract entered int by TRIO with its customer, it is clearly specified that for every Rs. 100/- worth of the contract Rs. 15/- shall be collected towards the service rendered for erectioning and commissioning of the elevators. The balance Rs. 85 /- are specifically charged towards the supply of materials. They have also verified the purchase costs for TRIO for purchasing such materials which are in turn supplied ....
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....contract service and have certified that it amounts to 85 % of the contract value. The Certificates issued by the Chartered Accountant and the Cost Accountant are authentic documents given by professionals. These certificates cannot be wrong as penal action can be taken against these professionals, in case it is found that they have issued false certificates. Further, in many cases, as cited above, CESTAT, has held that such certificates are authentic and have been looked upon as evidence. From the records of the case also, I find no reason to rebut the claim of the C.A and the Cost Accountant. Therefore, I accept the above Certificates produced by the assessee. Further, from the records of the case, I also observe that the assessee has not availed Cenvat Credit on inputs and the same is also certified by the Chartered Accountant. In such a scenario, the methodology of bifurcation of the value of contract into service portion and material portion, adopted by the assessee is in consonance with the applicable law. Even though the assessee, has paid Service Tax under Notification 12/2003, dated 26.6.2003, when they ought to have paid the Service Tax under Rule 2 A(i) of the Service Ta....
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....ontract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract; (b) value of works contract service shall include, - (i) labour charges for execution of the works; (ii) amount paid to a sub-contractor for labour and services; (iii) charges for planning, designing and architect's fees; (iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; (v) cost of consumables such as water, electricity, fuel, used in the execution of the works contract; (vi) cost of establishment of the contractor relatable to supply of labour and services; (vii) other similar expenses relatable to supply of labour and services; and (viii) profit earned by the service provider relatable to supply of labour and services; (c) Where Value Added Tax or sales tax, as the case may be, has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then such value adopted for the purposes of payment of Value ....
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....e or otherwise, machinery and tools used for the execution of the works contract; (v) cost of consumables such as water, electricity, fuel used in the execution of the works contract; (vi) cost of establishment of the contractor relatable to supply of labour and services; (vii) other similar expenses relatable to supply of labour and services; and (viii) profit earned by the service provider relatable to supply of labour and services; (c) where value added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works contract under this clause. (ii) Where the value has not been determined under clause(i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:- (A). in ca....
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....cluded from gross amount charge. It also prescribe in explanation b, the heads of expenditure which need to be included in the value of works contract service. The Clause 2A(ii) of the rule prescribed that in case the actual value of transfer of property in goods is not determined than the Service Tax need to be paid on 40% of the gross amount charged in cases of original works and 70% in other cases. The proviso of the said rule as amended from 01.07.2012 prescribed that the fair market value of goods and services supplied may be determined in accordance with generally accepted accounting principles. Thus the actual value of property in goods transferred need to be ascertained adopting generally accepted accounting principles. 17. It has been argued by revenue that Rule 2A of the Service Tax (Determination of Value) Rules, 2006 clearly lays down that only actual value of transfer of property in goods involved in the execution of Works Contract Service can be excluded from the total value of the contract. It is noticed that Commissioner in the impugned order in Para 90 has also held the same in following words: 90. The assessee in their written submission have themselve....
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....56) E.L.T. 216 (Kar.). The Hon'ble High Court's view was not disturbed by the Hon'ble Supreme Court vide 2011 (274) E.L.T. 321 (S.C.)." It has been argued that the said decision of Triibunal upheld by the Hon'ble High Court of Karnataka as reported in 2014 (313) ELT 8(Kar.)wherein following has been observed: "12........................ Over and above these certificates, the assessee did not produce any other material/additional evidence on record before the Tribunal in support of their claim. In other words, no efforts of whatsoever nature were made by the assessee in producing the additional materials/ evidence before the Tribunal after the order of remand passed by this Court and confirmed by the Supreme Court." The said argument has been accepted by the impugned order in Para 87 of the impugned order. The impugned order concludes in para 87 reads as follows: "87. One of the main arguments raised by the said assessee, in this regard, is that they have already paid VAT or sales tax on the materials supplied to their clients and hence service cannot be demanded on the value of such materials. I reiterate that it is nobody's case that service....
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....rage value basis. The revenue has carved out figures from the financial statements of the respondent in following manner: S.No Financial Year Total Value of Supply & Installation Value of material transferred Percentage 1 2007-2008 Financial statements not available 2 2008-2009 20,86,50,393 16,44,49,639 78.82 3 2009-2010 21,11,82,558 16,73,61,487 79.25 4 2010-2011 27,79,43,253 21,55,29,003 77.54 5 2011-2012 44,42,14,992 40,04,97,935 90.16 6 2012-2013 66,88,89,118 54,09,72,250 80.88 7 2013-2014 54,43,86,433 40,65,99,136 74.69 8 2014-2015 48,96,63,290 34,27,44,825 70.00 9 2015-2016 74,16,09,303 54,79,31,030 73.88 10 2016-2017 Financial statements not available On the strength of this assertion, it has been argued that the impugned order relies blindly on the certificate given by the Cost Accountant/Chartered Accountant without critically examining the same. 21. It has been asserted by revenue that the impugned order has wrongly invoked revenue neutrality. It has been argued that the concept of revenue neutrality can only be inv....
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....es as per applicable provision on the said material. For KANTILAL PATEL & CO CHARTERED ACCOUNTANTS FIRM REG. NO. 104744W (Rajesh G: Shah] Partner [Membership No.36782] Place : Ahmedabad Date : January 23, 2012 202. PARITOSH" USMANPURA (RIVER FRONT), AHMEDABAD - 380 013, GUJARAT. INDIA. TELE : 27551333. 27552333 FAX . 91-79-27550538: E-mail : [email protected] : Web :www.kpcindia.com Subsequently another report has been taken by respondent from the CA M/s. kantilal Patel & Co., with respect to the period April, 2007 to June, 2017, dated 31 December 2019, wherein following has been stated: Report of factual findings in connection with agreed-upon procedures assignment performed in respect of the CENVAT credit availed for the Period April 2007 to June 2017 in returns filed under the Finance Act, 1994, read with rule Service Tax Rules, 1994, prepared pursuant to requirement of Trio Elevators Co. (India) Limited To The Board of Directors, Trio Elevators Co. (India) Limited (CIN: U31103GJ2006PLC048885), 404, Shivam Complex, Bhuyangdev Cross Road, ....
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....9; issued by the Institute of Chartered Accountants of India. The sufficiency of these procedures is solely the responsibility of the Company. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures were performed solely to assist the Company in verifying the records relating to availment of CENVAT credit relating to service tax paid on input services only and not relating to excise duty paid on any inputs/capital goods, and are summarised as follows: 7.1. We have traced the amounts reported as CENVAT credit availed in Service Tax Returns filed for the period from April, 2007, to March, 2017, under the Finance Act, 1994, read with Service Tax Rules, 1994. The same has been mentioned in the Statement; 7.2. We have verified the working of service tax paid for period from April, 2017, to June, 2017. The same has been mentioned in the Statement; 7.3. We have verified the amount of CENVAT credit availed as reported in Service Tax Returns filed and working of service tax paid, with the records available with the Co....
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.... also not clear. An examination of the above report of CA Kantilal & Co, the following emerges: (i). The report is based on the basis of request to conduct agreed upon procedure dated Dec 27, 2019 and further communication. There are no details of agreed upon procedure that was requested by appellants. (ii). Para 7.1, 7.2 & 7.3 of the report read as under: "7.1 We have traced the amounts reported as CENVAT Credit availed in Service Tax returns filed for the period April, 2007, to March, 2017, under the Financial Act, 1994, read with Service Tax Rules, 1994. The same has been mentioned in the Statement; 7.2 We have verified the working of service tax paid for period from April, 2017 to June, 2017. The same has been mentioned in the statement; 7.3 We have verified the amount of CENVAT credit availed as reported in service tax returns filed and working of service tax paid with the records available with the Company, for the period from April, 2007, to June, 2017, to check whether the CENVAT tax credit taken is relating to input services or not;" The report is largely in respect of availment of Cenvat credit based on service tax ret....
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....; P.D.MODH & ASSOCIATES Cost Accountants +91 97277 67574 Email : [email protected] TO WHOMSOEVER IT MAY CONCERN We, M/s P.D.Modh & Associates Cost Accountants have conducted a review of the Supply Contracts and Cost Records of the Trio Elevator Company (India) Limited, for the Financial Year in specific reference to the Show Cause Notices dated 23.10.2012, 13.05.2014, 16.10.2015, 07.03.2018 (jointly referred to as "SCN"), and have to certify and confirm as under :- 1. All contracts for supply and erection of elevators, entered into with its customers, by Trio, have the following two distinct elements for which separate pricing is provided in the contract itself :- a. Supply b. Service 2. In each of the contract entered into by Trio with its customer, it is clearly specified that for every Rs. 100/- worth of the contract Rs....
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.... 15,040,033 Depriciation 2,299,692 - 2,299,692 Total Expenditure 72,411,295 8,188,929 80,600,224 Material Cost as of % of Total Revenue 86.78 Financial Year April'2007 to March'2008 FY:2007-08 Particulars Material Installation Total Sales 2300001/A (Elevators Price) 92,252,632 - 92,252,632 2300001/B (Erection Charges) - 11,357,304 11,357,304 2300001/E (WORK IN PROGRESS (NEW)) (27,731,985) - (27,731,985) 230001/B (Elevator Sale Price) 808,350 - 808,350 2303001/A ((BEX) Material Price) 3,567,510 - 3,567,510 2303001/B (BEX Erection Charges) - 632,565 632,565 2303001/C (BEX WIP) (873,656) - (873,656) Increase in Work-In-Progress at Sites 477,108 - 477,108 2304001/A (Service Revenue A/c) - - - 2306001/A ((T) Lifts Parts Price) 2,602,726 2,602,726 2306001/B ((T) Labour Charges) ....
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....es and telegraphs - - - Safety Cost - - - Loss on Fixed Asset - - - Provision for doubtful debts 9,342 - 9,342 Bad Debts - - - Provision for Doubtful Advances - - - Provision for maintenance and free service/ warranty - - - Interest Expense [Refer Note 28] - - - Miscellaneous Expenses 2,002,701 - 2,002,701 OPERATING AND OTHER EXPENSES 6,851,104 8,188,929 15,040,033 Depricaition 2,299,692 - 2,299,692 Total Expenses 72,411,295 8,188,929 80,600,224 Material Cost as of % of Total Sales 86.78 From the said certificate, it is seen that 100% of the following costs are apportioned to sale of goods: (i) Salary, Wages, Allowances, Bonus, Benefits(net) (ii) Provident Fund (iii) Direct Employee Cost (iv) Freight & Forwarding (v) Freight & Packing (vi) Octroi duty (vii) Power and Fuel (viii) Rent (ix) Repair and maintenance- other (x) Insurance (xi) Rates and taxes (xii) Travelling and conveyance (xiii) Legal and professional exp....
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....e, charges for obtaining on hire or otherwise machinery and tools for execution, cost of consumer such as water, electricity, fuel used in execution of works contract, cost of establishment of contractor relatable supply of labour services etc., are specifically includable in the value for the purpose ascertaining the value of Works Contract Service. The said provision also requires inclusion of the profit earned by the services provided. From the certificate of Cost accountant it apparent that none of these expenses have been including the cost of installation. All these expenses have been apportioned 100% to the cost of material. Thus the certificate of cost accountant is in total dis regard of the requirements of Rule 2A of Service Tax (Determination of Value) Rules. 25. Now I examine the Cost Accountant certificate relating to the financial Year, 2008-09. The data reads as follows: Tro Elevators Co.( India ) Ltd Finanical Year : April'2008 to March'2009 FY:2008-09 Particulars Material Installation Total Total Revenue 177,352,834 31,297,559 208,650,393 % of Total Revenue 85.00 15.00 - Cost of of Materia....
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....s 2,123,125.00 - 2,123,125 Packing and Forwarding Charges 2,151,950.50 - 2,151,951 Transist Insurance Exp 9,521.00 - 9,521 Insurance (Transist) Exps 22,060.00 - 22,060 Insurance Exp.(Vehicle) - 17,677.00 17,677 Sales Promotion Exps. 1,500.00 - 1,500 Consulting Charges. 816,000.00 - 816,000 SME In terest Exps. 357,315.00 - 357,315 Interest Others 774,613.00 - 774,613 Trade Discount - (1,989,796.00) (1,989,796) LICENCE FEES EXP. 66,200.00 - 66,200 Repairs & Maintenance (Vehicles) 130,805.00 - 130,805 Service Tax on Transport 17,468.00 - 17,468 Safety Cost Exps 616,329.00 - 616,329 Drawing & Design Exp. 224,021.00 - 224,021 Provision for Doubtful Debts 232,019.00 - 232,019 Miscellaneous 2,154,075.00 - 2,154,075 Telephone Exps 616,329.00 - 616,329 Electric Exps 318,208.27 - 318,208 Audit Fees 624,942.00 - 624,942 Office Rent Exps 1,395,889.00 - 1,395,889 OPERATING AND OTHER EXPENSES 12,652,369.77 (1,953,369.00) 10,699,000.77 D....
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....is noticed that in the said case the dispute related to the valuation for the purpose of Service Tax in cases involving re-trading of tyres. In the said case revenue was seeking to tax the entire value of re-trading cost recovered by the appellant. The appellant in the said case was seeking deduction of 70% as the value of the goods and parts used in the contract and sold to customer. It is noticed that in the said case there was no dispute regarding the actual value of goods sold by the appellant to the clients during re-trading of tyres. In the instant case it is noticed that the data relating to the actual value of goods involved in execution of the works contract is doubted and is rightly challenged. It can be seen from the analysis para 14-18 above wherein the data in respect of the Financial Year 2007-08 to 2008-09 was examined. It is seen that the respondent in the said case have apportioned the entire cost of over heads to the sale of goods despite the necessity of including many of this cost in the value of services. It is seen that Explanation (b) to Rule 2A(i) specifically requires inclusion of certain cost in the value of services prior to 01.07.2012. Similarly after 01....
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....Commissioning of Elevators which is in the nature of 'Works Contract Services' involved with both supply of goods and supply of services being involved. The assessee has been treating 85% of the contract as consideration received towards goods and has paid the VAT thereon. Treating in the balance 15% consideration as received towards service portion, they were paying the Service Tax on such consideration. Proceedings were initiated on the ground that the assessee was showing higher amount towards the value of goods without proper evidence because of which the Service Tax being paid was lower than what should have been paid by them. The Show Cause Notices were issued for the period April, 2007 to June,2017. The matter reached the Tribunal for some of the SCNs, wherein vide final order No. A/11183/2014 dated 03.07.2014, the matter was remanded to the adjudicating authority. During the de-novo proceedings, the adjudicating authority has gone through the various documentary evidence produced by the Respondent and after verifying the same, he has dropped the demands. Being aggrieved, Revenue filed this appeal before the Tribunal. 3. The learned AR appearing on behalf of the Revenue s....
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....ation issued by the State Government on 11.10.2006. He draws my attention to Sr. No. 5 of this Notification wherein it is clearly shown that in respect of lifts and elevators, the percentage of abatement allowed on account of service portion is 15% only. He submits that in view of this specific notification issued by the the Government of Gujarat, the assessee was paying the VAT on 85% of the consideration and paying the Service Tax on the balance 15%. With respect of the Revenue's argument that as per the balance sheet figures, the value of the goods was approximately around 70 to 75 %, he submits the Revenue has derived this percentage based on the purchase value of the goods involved. If they had taken the value of the sales price, this percentage could be at 85% only. 8. He also submits that the assessee has provided copies of the Chartered Accountant certificate clarifying that VAT was being paid on 85% of the consideration. In view of this facts, he submits that the Hon'ble Member (Judicial) has correctly decided that the case law of Touchstone Infrastructure and Solution Pvt. Ltd. and Johnson Lifts Pvt Ltd are applicable and has accordingly dismissed the appeal filed by t....
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....t is granted on account of service portion and the assessee is required to pay VAT on 85%. The relevant entry is reproduced below:- NOTIFICATION Finance Department, Sachivalaya, Gandhinagar Dated the 11^th October, 2006. No.(GHN-105) VAR-2006(8) /Th- WHEREAS the Government of Gujarat is satisfied that circumstances exist which render it necessary to take immediate action to make rules and to dispense with preyipus publication thereof under the proviso to sub-section (4) of section 98 of the Gujarat Value Added Tax Act, 2003(Guj. 1 of 2005); NOW, THEREFORE, in exercise of the powers conferred by section 98 of the Gujarat Value Added Tax Act, 2003(Guj. 1 of 2005), the Government of Gujarat hereby makes the following rules further to amend the Gujarat Value Added Tax Rules, 2006, namely :- 1. These rules may be called the Gujarat Value Added Tax (Seventh Amendment) Rules, 2006. 2. in the Gujarat Value Added Tax Rules, 2006, (hereinafter referred to as "the said rules"), in rule 2, for clause (g), the following clause shall be substituted, namely :- "tax period" for the purpose of return to be furnished by the dealer under the Ac....
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....tion, fabrication, assembling, commissioning of any Air conditioner plant, Air conditioner, Air cooler, whether or not fixed to any building or other immovable property. Ten percent. 4. Assembling, fitting out, re- assembling, improving, producing, repairing or otherwise treating of furniture, fixtures, partitions, including __ contracts -of interior decoration. Twenty percent. 5. Installation, fabrication, commissioning or repair of lifts or elevators or escalators. Fifteen percent. 14. The same issue was before the Chennai in the case of Johnson Lifts Pvt Ltd - 2023 (9) TMI 79. The relevant is extracted below: - "1.2 It appears that during further verification, the appellant revealed that the payment of VAT for works contract was made as per the prevailing/respective State VAT law. States allowed standard deduction as 15% except the State of Andhra Pradesh wherein such standard deduction was 30%. By this, the Revenue entertained a doubt that the payment of Service Tax by the appellant was not as per Rule 2A of the Service Tax (Determination of Value) Rules, 2006, subsequent to which it appears that there were few exchanges of communication, but ho....
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....ods transferred, it should have paid service tax under composition scheme. After calling for information from the appellant and examining the records, a show cause notice dated 21.12.2016 was issued to the appellant demanding differential service tax of Rs. 1,51,82,658/- as follows:- 4. The appellant paid VAT as per Section 5 of the Tamil Nadu VAT Act, read with Rule 8 (5) (d) of Tamil Nadu VAT Rules which prescribe that in case of works contracts 30% of the total amount charged would be treated as the service component and VAT shall be paid on the remaining 70%. The appellant discharged VAT accordingly and paid service tax on the 30% of the total amount reckoning it as the service component. The case of the Revenue is that service tax on works contract is chargeable on the consideration received for service portion of works contract if such consideration is available in the contract/invoice separately, otherwise service tax must be paid under the "Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 upto 30.06.2012. For the period after 01.07.2012, the value of service portion of works contract of composite nature has to be arrived at as specified in....
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....d @ 12.5% and on the balance 15% erection charges (service) Service Tax @ 12.36% is being paid. Such invoice itself would be proof enough once the same is read along with the Notification issued by the State Government towards payment of VAT, to come to a conclusion that the assessee has not arbitrarily adopted 85 to 15% bifurcation in respect of their transactions. 18. Even for the prior period, if Notification 12/2003 is read carefully it says that "subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials." There can be no better documentary proof than the invoice raised by the assessee. In the present case, it is clearly seen that the VAT is being paid on the 85% consideration treating the same as value of the goods. The Supreme Court's decision in the case of Safety Retreading Co. (P) Ltd case has already held that once VAT is paid on the value component as per the statutory provision of the State Government, the value of service cannot be put to question. 19. In view of the foregoing, I am in agreement with the conclusion arrived at by Hon'ble Member (Judicial). 20. Matter to be placed before the regula....