TaxTMI 
TaxTMI 
2024 (5) TMI 1575
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.... Commissioning and Installation Service (ECIS) (iii) Interior Decorator Service, and (iv) Construction of Residential Complex Service There are 8 appeals filed by the assessee i.e. M/s RPP and 4 departmental appeals being disposed off through this common order. The demands have been raised under 9 categories of services against which both RPP and the department are in appeal before this Tribunal. Since a large number of individual projects are involved in all the appeals put together, its proposed to group the projects service wise for ease of discussion and decision on the legal issues involved. 2. The index of issues discussed is given in the table below. Sl No Subject Para No Page No 1. Chronological dates and events pertaining to statutory provisions/ notifications 3.1 3 2. Chronological dates of important Judgements. 3.2 7 3. Legal position 4 8 4. Dredging 7 13 5. Works Contract/ Civil Supplies/ Residential Complex Construction/ Erection and Commission/ Commercial Construction Service 8 to 14 18 5a Service rendered was composite works contract and not liable to tax under any o....
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.... or similar services in relation to, building or civil structure, pipeline or conduit, which is - (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. 16.06.2005 Service Tax levied on "Construction of complex service" Sec. 65 (105) (zzzh) Taxable service means any service provided or to be provided to any person by any other person in relation to construction of complex. Sec. 65 (30a) "construction of complex" means - (a) construction of a new residential complex or a part thereof; or (b) completion and finishing services in relation to residential complex 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; or (c) repair, alteration, renovation or restoration of, or similar ser....
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.... proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects. 01.06.2007 Rule 2 A introduced in Service Tax (Determination of Value) Rules, 2000 to prescribe mechanism for valuation of service portion of works contract Notification 29/2007 Service Tax Dt. 22.05.2007 01.06.2007 Optional Composition scheme introduced for payment of Service Tax on Works Contracts, prescribing Service Tax rate of 2 % on gross amount Works Contracts (Composition scheme for payment of Service Tax) Rules, 2007. Notification 32/2007 Service Tax Dt. 22.05.2007 04.01.2008 CBIC clarified that if tax was paid under CICS or CCS before 01.06.2007, such service shall continue to be clas....
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....vice was classified under the respective taxable service prior to 01.06.2007. This is because 'works contract' describes the nature of the activity more specifically. As regards applicability of composition scheme, this provision casts an obligation for exercising an option to choose the scheme prior to payment of service tax in respect of a particular works contract. Once such an option is made, it is applicable for the entire contract and cannot be altered. Therefore, in case a contract where the provision of service commenced prior to 01.06.2007 and any payment of service tax was made under the respective taxable service before 01.06.2007, the said condition under rule 3(3) was not satisfied and thus no portion of that contract would be eligible for composition scheme. On the other hand, even if the provision of service commenced before 01.06.2007 but no payment of service tax was made till the taxpayer opted for the composition scheme after its coming into effect from 01.06.2007, such contracts would be eligible for opting of the composition scheme. 20.06.2012 Service Tax Mega Exemption Notification No. 25/2012 dated 20/06/2012, later amended by Notification dated 30/01/2....
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....en a contract for work and a contract for sale. Even if in a contract, besides the obligations of supply of goods and materials and performance of labour and services, some additional obligations are imposed, such contract does not cease to be works contract 3 Commissioner of Central Excise and Customs, Kerala Vs Larsen & Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)]. Decided on 20/08/2015 Settled the law that composite works contracts involving services and goods covered under Section 65(105)(zzzza) are liable to tax only with effect from 1st June, 2007. Service contracts prior to 01/06/2007, would cover only pure service contracts. 4 Suresh Kumar Bhansal Vs UOI-2016 (43) STR 3 Del. Decided on 03/06/2016 by Hon'ble Delhi High Court Explanations added in CICS and CCS from 01.07.2010 struck down, in the absence of statutory mechanism to determine the value of service. 5 Bhayana Builders Pvt. Ltd. Vs CST. Decision of the Larger Bench of the Tribunal Dated 06.09.2013. Upheld by the Hon'ble SC on 19/02/2018 (L & T decision is also noted by SC) While claiming abatement of 67% whether the value of materials supplied by customer also should be included or not. Held ....
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....rm "works contract". (emphasis added) II) A contract which has both the elements of goods and service is a works contract. The Hon'ble Apex Court in Commissioner Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [Civil Appeal No. 6770 OF 2004/ 2015 (39) S.T.R. 913 (S.C.)] (henceforth referred to as L&T Kerala) held that 'Works Contract' is a separate species of contract distinct from contracts for services simpliciter. Service contracts simpliciter is used to describe pure service contracts where the focus is solely on the provision of services i.e. services provided without any associated supply of goods or other complexities. There was no charging section to tax 'works contract' in the Finance Act, 1994 (FA 1994) i.e. until the amendment made with the insertion of subclause (zzzza) to clause 105 of Section 65 of the FA1994 on 01.06.2007. III) Pure construction services, where all materials etc. required for the construction are supplied by the service recipient and the service provider is engaged only for provision of construction service (not composite involving supply of goods) and are not in the nature of works contract are liable to service ....
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....using and Construction Ltd. Vs CST [(2023) 10 Centax 117 (Tri-Mad)] and came to be upheld by the Hon'ble Supreme Court on 05/09/2023. Composite contracts involving services and goods were liable to tax only with effect from 1st June, 2007. VI) From 01/07/2012, there was a paradigm shift in the levy of service tax. Section 66D of the 1994 Act, was inserted by the Finance Act, 2012 with effect from 01/07/2012, which listed the 17 services specified in the negative list of services, i.e., the services on which service tax is not leviable. Service tax was imposed on all services other than those specified in the negative list. VII) Classification of services is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify a service under a particular category different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. The judgments of the Hon'ble Supreme Court in Union of India v. Garware Nylons Ltd. [1996 10 SCC 413]; H.P.L Chemicals vs. Commissioner of Central Excise, [2006 (197) E.L.T. 324 (S.C.)]; Puma Ayruvedic Herbal (P) Ltd. v. Commi....
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....t to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled." 5. We have heard the rival parties. Shri S. Muthuvenkataraman, learned Advocate for RPP and Shri P.R.V. Ramanan, learned Special Counsel for the Department. Their arguments along with submissions made in writing will be examined while discussing the individual issues involved. The issues are categorised and discussed under the following heads: a. Dredging Service b. Works Contract Service (WCS) c. Civil Supplies d. Residential Construction Service (RCS) e. Erection and Commissioning and Installation Service (ECIS) f. Commercial Construction Service (CCS) g. SEZ h. Interior Design Services i. Site Formation Service 5.1 Since we are dealing with many contracts covered by the impugned orders, it would be relevant to refer to the Apex Courts judgment in DLF Universal Ltd. & Anr. v. Director, T....
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....IO. No. 11/2013-ST 8. KPM Canadian Work OIO. No. 19/2015 -ST 7.1 Submissions by Revenue: It is understood that the nature of work undertaken is mainly for removal of slush, mud, plastic and other waste and unwanted weeds to ensure the smooth flow of water during heavy rains and flood. The activity of 'deepening, widening and construction on the two sides for flood protection' as purported by RPP can be achieved only after dredging operations. Dredging is the main activity; repairs to the bund is incidental. Hence, impugned services are covered under the definition of 'dredging services'. The definition of 'dredging services' is inclusive in nature. It is not exhaustive in coverage. There is no need to apply the definitions in the dictionaries as the definition covers the activities as well as areas of application. Services have been rendered at Panavanar river, Kollidam river, Vadavar river, Manimuthar river and Buckingham Canal. The Canal is nothing but a man-made river, which was once used to carry timber and other merchandise to different destinations. Thus, areas of application are not different from those enumerated in the definition. Revenue relies on the decision....
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....iable as a dredging service (Revenue) or a works contract (RPP). RPP has entered into contracts with various entities to render service which is the subject matter of interpretation. As discussed above it would be essential to ascertain as to what service was contracted and rendered by the parties to the contract. What then was the substance of the contract in this case? A) The agreement entered into between the government of Tamil Nadu pertaining to the river Manimuthar from Paravalur to Gudaliyuthur is for construction of permanent flood protection works; clearing scrub jungle and levelling the site; earthwork which involves excavating and depositing on the Bank of the river in order to form a bund by spreading earth at the site in layers; Laying of foundation, placing cement, and erecting a horizontal and vertical cement concrete retaining wall. It did not involve any removal or excavation of material from the bottom of a water body using specialised dredger machinery. The intention of the contracting parties was not the dredging of the river. B) The South Buckingham Canal contract involves improvements to canals and construction of arterial drains and construc....
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....ce. Being an indirect tax, it is not a charge on the business but on the consumer. Classification of a taxable service is determined based on the nature of service provided. While classifying a service it hence necessary to be kept in mind that a service provider exists because of a consumer or user's needs and not vice versa. The provision of service represents the way in which a service provider aligns its capabilities, on the one hand, with the needs, demands and expectations of a service consumer / user. Since Service tax is a levy on the event of service, the event, provided it is covered by the FA 1994, is the service which fulfills the needs of the consumer or user. 7.3.3 The legal issue is obvious and trite that a subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of the individual case. From the above description it is seen that the service tax recipients were seeking the services of RPP for construction of drainage canals and bunds on the bank of water bodies as a flood protection measure; for construction of permanent flood protection works; clearing scrub jungle and levelling the site;....
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....Commercial Construction are based on some common legal issues and hence are being considered together. Common discussion and decision are at para 14. 9. WORKS CONTRACT S.No Name of the Project Order in original / Appeal Period and duty amount involved 1. CMDA OIO. No. 07/2017-ST The Appellant has submitted that the period of dispute is from 01.04.2013 to 30.06.2015 i.e. after the introduction of the 'Negative List' in Service Tax law, from 01.07.2012. The Total Service Tax Demand is Rs. 1,31,86,275/-, 2. Madurai Corporation Vegetable Market OIO. No. 07/2017-ST OIO. No. 02/2017-ST 3. SPH OIO. No. 17/2015-ST OIO. No. 07/2017-ST (JC) 4. SIPCOT, Perundurai OIO. No. 17/2015-ST OIO. No. 7/2017 5. CCA, Chennai OIO. No. 17/2015-ST 6. M.P. Garden OIO. No. 17/2015- ST 7. SPAC OIO. No. 17/2015-ST 8. MMIS-MRPL OIO. No. 07/2017- ST OIA.No. 47/2017- ST 9. KPTCL (KTSS) OIO. No. 02/2017-ST 10. Anna Universtiy (Tuticorin) OIO. No. 02/2017-ST 9.1 Submissions by Revenue: (i) Project 'CMDA' is for construction of parking yards for trucks as a facilitation measure use....
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....nsmission within the state of Karnataka. Exemption has been denied on the ground that KPTCL is a commercial concern. (ix) Project 'Anna University' relates to construction of hostels for students of the University at Tuticorin. Exemption under S.No.12 of 25/2012 has been denied on the ground that hostels are not directly related to imparting education. 9.2 Submissions by RPP: The period of dispute is from 01.04.2013 to 30.06.2015 i.e. after the negative list of services was incorporated into FA 1994. The Total Service Tax Demand is Rs. 1,31,86,275/-, All the services are rendered directly or indirectly to governmental authorities under various Clauses of the Mega Exemption Notification No. 25/2012 dated 20.06.2012 like 12(a), 13(a), 14(d). They have drawn attention to the Apex Courts judgment in Commissioner, Customs Central Excise and Service Tax, Patna v. M/s. Shapoorji Paloonji and Company Pvt. Ltd. & Ors. [Civil Appeal No. 3991-3992/2023, Dated 13/10/2023] in support of their stand. 10. CIVIL SUPPLIES (WORKS CONTRACT) S.No Name of the Project Order in original Period and duty amount involved 1. ALCS OIO. No. 02/2017-ST The period of d....
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....themselves gets squarely attracted and that the appellant falls outside the said purview. It would not be out of context here to state that Public Distribution System is a primary concern of the State and the appellant is supplying goods to the Tamil Nadu Civil Supplies Corporation and that both the entities are State funded, State controlled and State monitored organisations and are discharging duties for the welfare of the people of the country. 11. RESIDENTIAL COMPLEX CONSTRUCTION S.No Name of the Project Order in original Period and duty amount involved 1. NIT, Trichy OIO. No. 11/2014-ST OIO. No. 14/2013-ST OIO. No. 11/2013- ST Period of Dispute is 2004 to 2009 & 01.04.2010 to 30.06.2015 i.e. prior to the introduction of the 'Negative List' in Service Tax law, from 01.07.2012. The Total Service Tax Demand is Rs. Rs. 7,45,64,036/-. 2. NTECL OIO. No. 11/2014-ST OIO. No. 14/2013- ST OIO. No. 11/2013-ST OIO. No. 19/2015-ST OIO No. 17/2015 -ST OIO No. 07/2017 - ST 3. HPL (Sri lanka Residential Building) OIO. No. 11/2013-ST OIO. No. 19/2015- ST 4. Tsunami Reconstruction of Vulnerable houses ....
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....des, it is seen that S.No 12 (c) specifies a structure 'predominantly for use as an educational establishment', which is different from 'use by an educational establishment'. (ii) Project NTECL-A: This project involved construction of sewage treatment plant and external electrification of Residential township at Vallur Thermal Power project of NTPC, a PSU which is run on commercial lines. Hence, the tax demand is in order. (iii) Project NTECL-B: This project involved construction of residential houses and other usages like park in the Vallur township of NTECL. It is seen that RPP has received materials for construction thus the services are covered under CRCS. Exclusion from coverage in case of construction of complex for 'personal use' is, however, a factor in favour of the appellant. (iv) Project NTECL-C: This pertains to houses for employees. It is seen that for the project, materials for construction were received. If so, the services are covered under CRCS not WCS. This aspect needs clarification from the appellant. (v) Project HPL: This project relates to construction of 1000 houses in Northern Sri Lanka. Payment for the services were recei....
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....use' is, however, a factor in favour of the appellant. 11.2 RPP's Response: Period of Dispute is 2004 to 2009 & 01.04.2010 to 30.06.2015 i.e. prior to the introduction of the 'Negative List' and the Total Service Tax Demand is Rs. Rs. 7,45,64,036/-. These activities carried out by M/s RPP fall within the scope of WCS defined in section 65(105)(zzzza) of the FA 1994. The statute intentionally integrated construction of a new residential complex, commercial or industrial construction service, et al., where there is a transfer of property in goods within the definition of Works Contract Service. RPP submits that both transfer of goods pursuant to a contract for the construction of a residential complex was made, therefore no service simpliciter was provided. Since the Department has in some cases (albeit inconsistently) extended abatement, establishing that there was a transfer of goods along with provision of service. Therefore, the demand under any other taxable service head is not sustainable. They have also relied upon Final Order No. 40920/2023 dated 13.10.2023, in the case of M/s. GET Power Pvt. Ltd. where the Tribunal had after considering the said decisions of Lar....
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....covered in Appeal No. ST/40281/14, the work description comprises, rehabilitation of irrigation infrastructure, strengthening of flood channel and dam, which involve civil construction work, laying of pipes for delivery and drawl of water and erection of pumping stations, which consists of more than two services. Applying the provisions of section 65A, it has been held that the essential character is lent by ECIS. (iv) As regards 4 projects, covered in Appeal No. ST/42195/14, the reasoning adopted by the AA is the same as at (iii) above. (v) As regards 8 projects, covered in Appeal No. ST/40280/14, the reasoning adopted by the AA is the same as at (iii) above. (vi) As regards 16 projects, covered in Appeal No. ST/163/11, the AA has relied upon the decision of the Larger Bench of the Tribunal in the case of BSBK Ltd. and held at Page 44 that the some of the projects involve 'plumbing, drain laying or other installations for transport of fluids' and they are rightly classifiable under ECIS. In respect of service rendered for doing structural steel work for industrial plant at Bhiwadi as a sub-contractor to L & T, the work, being related to structures is cov....
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....ombay High Court in the case of D.P. JAIN AND COMPANY INFRASTRUCTURE PVT. LTD. Versus UNION OF INDIA 2016 (43) S.T.R. 507 (Bom.) has held that the said service would if not under Commercial construction be covered only under Management maintenance and repair service. M/s RPP submits that the same having not been proposed in the notice or order, the entire demand of service tax is liable to be set aside. 13. COMMERCIAL CONSTRUCTION SERVICES S.No Name of the Project Order in original Submissions of RPP 1. Construction of Indoor stadium, Pondicherry Govt. MAHE, OIO. No. 06/2010-ST OIO. No. 11/2014 OIO. No. 14/2013 OIO. No. 11/2013 The Period of dispute is from FY 2004- 2009 and 01-04-2010 to 30-06-2015. i.e. prior to and after the introduction of the 'Negative List' in Service Tax law, from 01.07.2012. The total demand raised under this particular head cumulatively for all the projects and appeals where this issue arises is Rs. 3, 10, 77, 895/-. 2. DCW, OIO. No. 06/2010 OIO. No. 14/2013 OIO. No. 11/2013 3. SSP, OIO. No. 06/2010 OIO. No. 14/2013 OIO. No. 11/2013 4. CCA Chennai, OIO. No. 11/2014-T OIO. No. 14/....
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....lassified the services under CICS. (vi) SPH: The project involved construction of circulating water system and fire protection system at NLC and has been carried out as a sub-contractor. (vii) BHEL (R&C): The scope of work was construction of additional shop floor for BHEL at Trichy as a sub-contractor of Richardson & Cruddas. (viii) SIPCOT Siruseri: The work involved providing concrete retaining walls for side of existing open drains at SIPCOT Siruseri. The said construction is meant for the use of industries at Siruseri, for which SIPCOT is recovering charges. SIPCOT is a corporate body and is not a statutory authority. The SCN /OIO has classified the services under CICS. (ix) 'SIPCOT Perundurai': The work involved was construction of a sump for water supply to the factories, providing external lighting arrangement, open well submersible pump set etc. The SCN /OIO has classified the services under CICS. (x) SSE: RPP had executed the work as job-worker to Sri Saravana Engineering works. The work related to hydro-electric project cooling water system, drainage system and embedded parts including supporting structures for Bhavani Barrage.....
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....Weaving Park, that is construction of all buildings and loom sheds at Kumarapalayam. RPP stated that they did not pay the tax as they had not received the tax amount from the client. However, they have received payment for the services. Hence, demand merits confirmation. Besides, the work began prior to 2007 and got completed in 2009. In terms of rule 3(3) of 2007 Rules, and the decision in the case of Nagarjuna Construction Pvt. Ltd., their classification could not be changed to 'Works Contract' services. (xix) Neyveli Bridge and Road: Scope of work includes Construction, structural work, electrical work for site office, Security House, drains, roads etc.at NLC, Neyveli. No separate cost is available for roads. (xx) VPR: Scope pf work involves civil work for a common effluent plant for industries Tirupur. The factories using this facility pay purification charges. The work is for a commercial purpose. Besides, the work began prior to 2007 and got completed in 2008. In terms of rule 3(3) of 2007 Rules, and the decision in the case of Nagarjuna Construction Pvt. Ltd., their classification could not be changed to 'Works Contract' services. (xxi) Thermax: Sc....
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....ment room for garden staff, clock room at the entrance, operation and maintenance of irrigation network. Abatement at 67% was also allowed to the Appellant. The work is in the nature of composite works contract and abatement has also been provided for the same. 14. Discussion: The two common issues raised by RPP which run right through the different individual services rendered by them to their clients and alluded to in para 8, i.e. (i) Works Contract (ii) Civil Supplies (iii) Residential Construction (iv) Erection and Commissioning and Installation (v) Commercial Construction, are (i) the works carried out by RPP constitute composite works contracts, not pure service contracts and hence are taxable under Works Contract Service only. This is subject to the legal position that no service tax was leviable on Composite Works Contract prior to 01.06.2007 and after the said date duty can be demanded only if the Show Cause Notice proposed classification of the said service as Works Contract Service and not under any other classification head. (ii) services rendered are mostly to "governmental authority" and hence are exempted. These general and connected issues are examined below; ....
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....ct Service' from the respective classification and pay service tax for the amount received on or after 01.06.07 under the Composition scheme? Board's Circular No. 98/1/2008-ST, dated 4.1.2008 which clarified the position, held that classification of a taxable service is determined based on the nature of service provided whereas liability to pay service tax is related to receipt of consideration. Vivisecting a single composite service and classifying the same under two different taxable services depending upon the time of receipt of the consideration is not legally sustainable. The implications was that assesses, who had paid service tax prior to 01.06.07 for the above mentioned taxable services, were not entitled to change the classification of the single composite service for the purpose of payment of service tax on or after 01.06.07 when the 'works contract service' was introduced and hence, were not entitled to avail of the 'Composition Scheme' whereby service tax was required to be paid only on 33% of the total value, subject to conditions. iv) The Circular No. 98/1/2008-ST, dated 4.1.2008 found support from the Hon'ble Supreme Court's judgment in Nagarjuna Constn. Co.....
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....ices being services simpliciter, the said judgment would hold good even after 01.06.2007 so far as the non-levy of service tax on composite works contract under these clauses is concerned. Composite Works Contracts classified under Contract Service [Section 65(105)(zzzza)] as on 01.06.2007 would however be leviable to service tax. vi) The Nagarjuna Constn. Co. Ltd. judgment (supra) came up, along with others, for consideration by the Apex Court in Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes [2022 (63) G.S.T.L. 257 (S.C.)], since Revenue prayed that the Apex Courts decision in L&T Kerala (supra) requires re-consideration by a Larger Bench. The Hon'ble Court held that if the prayer made on behalf of the Revenue to re-consider and/or review the judgment in the case of L&T Kerala was accepted, in that case, it will affect so many other assessees in whose favour the decisions have already been taken relying upon and/or following the decision of this Court in the said case and it may unsettle the law, which has been consistently followed since 2015 onwards. This being so Revenues plea that in a similar matter concerning Shri S.K. Bansa....
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....he exemption. The amended definition is set out hereinbelow; "(s) "governmental authority" means an authority or a board or any other body; (i) set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution." iv) The Hon'ble Patna High Court in its interpretation of clause 2(s), observed that provisions contained in sub-clauses (i) and (ii) of clause 2(s) are independent disjunctive provisions and the expression "90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution" is related to sub-clause (ii) alone because sub-clause (i) is followed by the punctuation ";" and then by the conjunction "or". According to the Court, any authority set up by an Act of Parliament or by an Act of the State Legislature as envisaged in sub-clause (i), therefore, cannot be made subject to the condition of "90% or more participation by way of equity or control" and it is only an authority or a board or ....
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.... have to demonstrate that (i) they have been established by Government, with 90% or more participation by way of equity or control; (ii) they have been established to carry out any function entrusted to a municipality under article 243W of the Constitution. The benefit of the notification can be claimed for projects which commenced after 20/06/2012 and satisfy its conditions. vii) Some of the relevant Clauses of the Mega Exemption Notification No. 25/2012 dated 20.06.2012 like 12(a), 13(a), 14(d) read as follows: "12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) A civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;" ........... "13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) a road, bridge, tunnel, or terminal for road transportation for use b....
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.... be demanded since the legal issue was far from clear and was only settled after the judgement of the Larger Bench. We find that the Board Circular issued in 2002 had clarified that service tax is not payable by sub-contractor if service tax is discharged by the main contractor. However, by Circular No. 96/6/2007-ST dated 23.08.2007 and as per Ministry's letter F. No. 323/16/2010 TRU dt 24.05.2010 a subcontractor is liable to pay service tax. A sub-contractor is essentially a service provider, therefore the sub-contractor is required to charge Service Tax to the main contractor. We agree that the legal issue was contentious and non-payment of tax cannot be held to be a result of suppression, et cetera as the legal issue got settled only after the Larger Bench Decision dated 23/05/2019 in the case of Melange Developers (supra), hence extended time limit cannot be invoked for demand of duty, in case the demand is sought on the said term. 14.1 In fine the legal issue relating to the levy of Service Tax on composite services involving both goods and services being treated on par with pure construction services prior to the introduction of works contract service was largely accepted ....
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....rbaer, Chennai SEZ OIO. No. 11/2014-ST OIO. No. 14/2013 OIO. No. 11/2013 Period of Dispute is 01.04.2010 to 30.06.2015 i.e. prior to and after the introduction of the 'Negative List' in Service Tax law, from 10.07.2012. Both periods. Total Service Tax Demand is Rs. 90,73,575/-. 2. Mangalore SEZ Pipeline Corridor and Compound OIO. No. 02/2017 15.1 Revenue's submissions: The period of dispute is after 15/5/2009. The exemption claimed by the developer or units of SEZ as per Notification 9/2009-Service Tax, dated 03/03/2009 was amended by Notification No. 15/2009-ST dated 20.5.2009 changing the conditions for availing exemption under the main notification in certain situation. Revenue has observed that RPP has not provided proof that the services were rendered within the SEZ premises. Considering the intangible nature of the services the notification envisages duty exemptions only for those services which are consumed within a SEZ, in other cases, the exemption is provided by way of a refund. Department has stated that they would not otherwise be in a position to verify the consumption of service since the consumer is a SEZ and not under its jurisdiction. T....
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....tement of 67% and hence composite in nature, categorising under works contract. M/s RPP in this regard place reliance on the latest decisions of this Tribunal, as discussed in para 4.4. supra. It is further submitted that in their case for the projects executed for the very same company, in other Appeals exemption has been granted and therefore it is prayed that the same might be followed in the present case as well. 15.3 Discussions: The dispute relates to the interpretation of amending notification 15/2009-Service Tax, dated 20/05/2009. Relevant portion of the same is reproduced below; Notification No. 15/2009-Service Tax G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 9/2009-Service Tax, dated the 3rd March, 2009 which was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 146(E), dated the 3rd March, 2009, namely:- In the said notification,- (A) in paragraph 1, in ....
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....ation issued under FA 1994 can regulate the manner in which an exemption is availed, especially when the services are utilized by the Developer or Unit outside the SEZ enclave, which is a penumbra area for the application of the SEZ Act and there is a likelihood of misuse of the exemption. 15.3.2 SEZ is a specifically delineated duty-free enclave, deemed to be a foreign territory for the purposes of trade operations and duties and tariffs. As per the Hon'ble Supreme Courts judgment in Imagic Creative Pvt. Ltd vs Commissioner Of Commercial Taxes [2008 (9) S.T.R. 337 (S.C.)] a deeming fiction should not be applied beyond a point which was not contemplated by the legislature. It stated as under; 26. We have noticed hereinbefore that a legal fiction is created by reason of the said provision. Such a legal fiction, as is well known, should be applied only to the extent for which it was enacted. It, although must be given its full effect but the same would not mean that it should be applied beyond a point which was not contemplated by the legislature or which would lead to an anomaly or absurdity. 15.3.3 In RK Garg v. Union of India [(1981) 4 SCC 675], a Constitution Bench....
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....cost advantage to the SEZ units/ developers as a consequence of the unregulated availing of exemption could impact DTA units. Hence as recognized in the RK Garg judgement (supra), Government in order to address a complex policy issue and to provide a level playing field to DTA units vis-à-vis the SEZ units, should be able to regulate the manner of SEZ units availing duty exemption so as to avoid its misutilization and for better accountability. As stated by Revenue the Department, in the absence of notification conditions would not be able to verify the consumption of service since the consumer is a unit located inside the SEZ. The SEZ authorities will also not be able to verify the actual and proper availing of exemption by the said unit since consumption takes place outside SEZ, leading to a gap in verification. Hence in the absence of proper procedural safeguards being put in place in the exemption notification, the policy is capable of being misused. 15.3.4 The judgment of a Coordinate Bench of this Tribunal in M/s. Vision Pro Event Management (supra) pertains to exemption under Notification No. 4/2004-S.T., dated 31-3-2004. The issue was whether the appellants in tha....
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.... (Civil) Diary No(s).22140/2019, dated: 26 July, 2019] examined the SLP arising out of the Hon'ble high Courts final judgment and order dated 27-12-2018 in WP No. 13546/2018 and saw no reason to interfere with the impugned judgment and dismissed the SLP. It has been held by the Hon'ble Supreme Court in the case of SS Nadar Vs Tamil Nadu [(2002) 8 SCC 361] that simpliciter dismissal of the SLP in another case does not create a binding precedent and does not amount to pronouncement of law. However the issue having been decided in favour of the assessee, judicial discipline and propriety demands we follow the same, hence the appeal succeeds and the need for examining whether the case of Mose Bar is covered under WCS does not arise. In the case of Mangalore SEZ pipeline the objection was technical in nature. RPP has the requisite certificates and hence the demand in this regard also does not survive. 16. INTERIOR DESIGN SERVICE S.No Name of the Project Order in original Submissions of RPP 1. CPCL OIO. No. 11/2013 Period of Dispute is 2004-2009 i.e. prior to the 'Negative List' in Service Tax law, from 01.07.2012. The Total Service Tax Demand is Rs. 18....
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....1 Submissions by Revenue: In respect of Cauvery High-Tech Park, the activity carried out is stated to involve earth work, levelling and grading of areas, which is covered by the definition of site formation. As for the services rendered to SIMA, as per the OIO, the primary work was site grading and other works like barbed wire fencing, road culverts etc. were ancillary in nature. RPP has contested stating that the contract in SIMA is contrary to what is stated in the OIO. Hence, RPP may be asked produce a copy of the contract under an affidavit to prove their stand. The fact that the payment for the work done in 'CHP drainage' was received as an arbitral award is not relevant. All the same, it represents consideration for services rendered. 17.2 Submission by RPP: Period of Dispute is 01.10.2010 to 31.03.2012 and the Total Service Tax Demand is Rs. 9,55,915/-. With regard to CHP Drainage, RPP submits that show cause notice did not specify the category under which the said contract will be taxed. This is evidenced from the impugned OIO where the commissioner has conceded that SCN does not specify the category of service. However, order has proceeded to evaluate the contract ....
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....nd the service tax calculated backwards to be paid along with appropriate interest. Further as per Revenue the appellant had not made available a copy of the contract relating to SIMA to the original authority. A copy of the contract should have been made available to the Department as and when called for. As the basic facts and documents like that of the contract are within the special knowledge of the assessee the initial burden of rebuttal is on the assessee. Section 106 of the Indian Evidence Act., 1872 gives statutory recognition to this universally accepted rule of evidence. In fact adverse inference could be drawn against the assessee if he had suppressed documents and evidence, which were exclusively within his knowledge and keeping. However we feel that the appellant can be given one more opportunity to produce the documents required by the Department and the matter regarding the SIMA contract merits to be remanded for a decision afresh. 18. Appeals filed by the Department: The appeals filed by the department were considered by us in the discussions above and the decisions taken for the individual services include the said appeals. The decisions are summarised below. ....