TaxTMI 
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2025 (9) TMI 64
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....7,03,325/ 6.2 I order for payment of applicable interest on the actual amount as mentioned in Para (6.1) above in terms of Section 75 of the Finance Act 1994. 6.3 I impose a penalty of Rs. 10,000/-(Ten Thousand) only on the noticee under Section 77 of the Finance Act 1994. 6.4 I impose a penalty of equal amount i.e Rs.5,94,09,078)-(Rupees Five crore Ninety Four-lakh Nine thousand Seventy Eight) only on noticee in terms of provisions of Section 78 of the Finance Act 1994. However, if the noticee pays the service tax, within 30 (thirty) days from the date of communication of this order, the penalty will be reduced to 25% (Twenty five percent) of the said amount. 6.5 I refrain from imposing penalty under Section 76 of the Finance Act' 1994. 1.3. Vide Corrigendum dated 10.07.2014, the following amendments have been made in the impugned order: - This corrigendum is issued in respect of Order-in-original No. 16/Commr/ST/KOL/2014-15 dated 30.05.2014 in respect of the following: 1. In para 6.1, the amount confirmed. should be read as Rs 5,53,80,257/ instead of Rs.5,94,09,078/- and Rs. 5,57,03,0325/- should be read as Rs 5,16,74,5....
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....-11 107219480 10721948 214439 107219 11043606 2011-12 24768356 2476836 49537 24768 2551141 2012-13 Apr-Jun 3932598 471912 9438 4719 486069 Total 452745330 48643911 972878 486439 50103229 2.4. In respect of 'commercial or industrial construction services', appellant was required to pay Service Tax as detailed in the table below: Amount in Rs Year Service Charges Service Tax Edu. Cess S & HE Cess Total 2007-08 Oct- Mar 1255793 150695 3014 1507 155216 2008-09 1222293 146675 2934 1467 151075 2009-10 0 0 0 0 0 2010-11 3100000 310000 6200 3100 319300 2011-12 50969381 5096938 101939 50969 5249846 2012-13 Apr-Jun 7469227 896307 17926 8963 923196 Total 64016694 6600616 132012 66006 6798634 2.5. In respect of 'site formation and clearance, excavation and earthmoving and demolition and such other similar activities', appellant was required to pay Service Tax as detailed in the table below: - Amount in Rs Year Service Charges Service Tax Ed....
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.... payment of Service Tax including Education Cess and Secondary & Higher Education Cess; (iii) Penalty should not be imposed upon them in terms of Section 78 of the Finance Act, 1994 for their act of suppressing the fact of providing taxable services and failure to pay Service Tax including Education. Cess and Secondary & Higher Education Cess properly in contravention of the provisions of Section 68, 69 and 70 of Chapter V of the Finance Act, 1994 read with Rule 4, 5, 6 & 7 of the Service Tax Rule 1994; (iv) Penalty should not be imposed upon them in terms of Section 76 of Finance Act, 1994 as amended for failure to pay Service Tax including Education Cess and Secondary & Higher Education Cess properly in contravention of the provisions of Section 68, 69 and 70 of Chapter V of the Finance Act, 1994 read with Rule 4, 5, 6 & 7 of the Service Tax Rule 1994, (v)Penalty should not be imposed upon them in terms of Section 77 of Chapter V of the Finance Act, 1994 for failure to take Certificate of Registration in respect of all the taxable services and to file return in the prescribed format to the department incorporating therein amount of service charges recei....
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....not be proper. Accordingly, the demand issued solely on the basis of statutory records, beyond eighteen months from the relevant date, is barred by limitation. (v) Also that there has been calculation error while computing the demand because they have deposited Service Tax which is much more than that has been appropriated vide the impugned order. (vi) Details of Service Tax paid by the appellant for the period from 26.12.2012 to 20.03.2014 is as indicated in the table below: - 4.2. Authorized Representative reiterates the findings recorded in the impugned order. 5. We have considered the impugned order along with the submissions made in the appeal and during the course of arguments. 6. The impugned order records the findings as follows: - 4. Services provided to M/s. Bengal Shristi Infrastructure Development Ltd. And M/s. Shristi Infrastructure Development Corporation Ltd. 4.1 During the period from Oct 2007 to June 2013 the noticee provided taxable service i.e. as defined under the categories of Sec 65(105)(zzzh), Sec 65(105)zzq & Sec 65(105)(zza) respectively i.e. "Construction of complex services, Construction of Commercial & i....
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....But on going through work orders issued by the service recipients in favour of the service provider for the purpose of Construction of Residential Complexes at different places, it has been noticed that the "description of item of civil work was very specific and categorical, where it has been mentioned that the cement & steel would be issued free of cost. Description of item of Civil work also clearly indicated the value of the work stating respective quantity and rate, the bill of quantity, contractual terms and conditions and drawings thereof. 4.2 I find that the SCN has questioned the avalling of abatement under Notification No. 1/2006 ST dated 01.03.06. The SCN has clearly mentioned the rationale behind such chjection and the projects against which the abatement was availed by the noticee. The noticee against none of the projects has claimed to the contrary. The allegation that the noticee did not consider the value of the supplied materials in their tax liability calculation can only be countered with the documentary evidence showing the value of the supplied goods and the same was not included in the gross value of the sum total. I find that the noticee while defend....
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....was not taxable as the services provided for construction of road were executed against different and separate work orders and not against a single contract and for that reason they did not pay service tax of an amount of Rs. 23,43,059/- (as proposed to be payable in the SCN) based on CBEC's circular no. B1/6/2005-TRU dated. 27-07-05 (Para 14.4 & 14.5) where Para 14.5 reads 'If the contract for construction of commercial complex is single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the value of construction of roads. In Para 3.2 of SCN it was alleged that the noticee conducted drainage work, infrastructural work for car parking, plumbing & sanitary system installation work and road work within the township or complex. In addition, the noticee constructed labour hutment to facilitate their labourers for executing the project township. And although all such works were conducted by the noticee against separate work orders placed by their clients, the same were in relation to the completion of entire project at site or complex or ....
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....es provided to M/s Bengal Shristi Infrastructure Development Ltd & M/s Shristi Infrastructure Development Corporation Ltd. during the year 2007-08 to 2012-13( June) is also justified as shown in the table below. Amount in Rs. Services Gross Bill Value Service Tax demanded Const. of complex services 18,26,28,285/- 2,01,87,092/- Const. of comm. & indust. service 8,34,055/- 87,645/- Site formation 1,86,92,735/- 19,25,350/- Const. of road services 2,18,38,128/- 22,43,059/- Total 22,39,93,203/- 2,45,43,146/- 5 Services provided to the Kolkata Municipal Development Authority, Balmer Lawrie and Co. Ltd, Barrackpore Municipality & M/s. Westinghouse Saxby Farmer Ltd. 5.1 I find that during the period from Oct 2007 to June 2013 the noticee provided services in the category of Construction of Complex services, Commercial & Industrial services as defined under Sec 65(105)(zzzh), Sec 65(105)zzq & Sec 65(105)zza r....
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....wards was not raised in the SCN only that pertaining to the period prior to 01-07-10 was raised in the SCN. So the particular Issue needs no further discussion. As discussed supra, the benefit of the Notification No. 1/2006 St Dated 01-0306 is also inadmissible since the value of the goods and materials provided, supplied or used is includible in the gross value of service, which they provided to various service recipients. Accordingly the demand of Service Tax for the taxable services provided to M/s Kolkata Municipal Development Authority, Balmer Lawrie and Co. Ltd, Barrack pore Municipality & M/s. Westinghouse Saxby Farmer Ltd. to the extent of Rs. 3,43,35,059/- is justified which is recoverable from the notice. 5.2 I am not inclined to accept the contention of the noticee that: 'When some materials such as steel, cement etc. are supplied free of cost by the recipient of service, they can in no way include the value of such materials in the gross amount charged and collect the cost of such free supply materials for which the recipient himself has incurred expenses." Since there is no provision in the statue requiring an assesse service provider to charge the value o....
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.... appropriate service tax by irregular availment of abatement in terms of Notification. No. 1/2006 ST and/ or Works Contact Composite Scheme. Thus, there was suppression on their part and consequently the case-laws relied upon in this regard cannot be applied in the instant case. That the noticee did not act in a bona fide manner is evident from the fact that they never informed the department regarding the amount received from their clients. I have already discussed the aspect of interpretation of statute raised by the noticee. In the instant case the noticee acted as per their own convenience. I also find that the referred case-laws do not condone any violation statutory provisions where element of suppression of facts and intent to evade govt. due are absolutely clear. Thus I find that the extended period of limitation as provided under Section 73 of the Act has been correctly invoked in. 5.7 The present case I have noted that the SCNs proposed imposition of penalty in terms of section 76, 77 and 78. Regarding application of both section 76 and 78, I find it a settled law, penalty cannot be imposed both section 76 and 78 simultaneously. In this regard I would like to ref....
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.... appropriable to the government exchequer. Amount in Rs. Services Gross Bill Value Service Tax demanded Const. of complex services 25,03,91,220/- 2,73,55,070/- Const. of comm. & indust. service 6,06,23,806/- 63,98,118/- Site formation - 5,81,865/- Total 31,10,15,029/- 3,43,35,053/- 4.3 The issue with regard to inclusion of free supply of raw materials has been decided by the Hon'ble Supreme Court in the case of Bhayana Builders (P) Ltd. v Commissioner of Service Tax, Delhi 2018(10) G.S.T.L. 118 (S.C.) wherein the following has been observed: - "11. As already pointed out in the beginning, all these assessees are covered by Section 65(25b) of the Act as they are rendering 'construction or industrial construction service', which is a taxable service as per the provisions of Section 65(105)(zzq) of the Act. The entire dispute relates to the valuation that has to be arrived at in respect of taxable services rendered by the assessees. More precisely, the issue is as to whether the value of goods/materials supplied or provided fr....
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....service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. The cost of free supply goods provided by the service recipient to the service provider is neither an amount "charged" by the service provider nor can it be regarded as a consideration for the service provided by the service provider. In fact, it has no nexus whatsoever with the taxable services for which value is sought to be determined" 13. A plain meaning of the expression 'the gross amount charged by the service provider for such service provided or to be provided by him' would lead to the obvious conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the 'gross amount' simply, because of the reason that no price is charged by the assessee/service provider from the service recipient in respect of such goods/materials. This further gets strengthened from the words 'for such service provided or to be provided' by the service provider/assessee. Again, obviously, in respect of the goods/materials supplied by the service recipient, no service is provided by the a....
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.... provisions mentions that any form of payment by issue of credit notes or debit notes and book adjustment is also to be included. Therefore, the words 'in any form of payment' are by means of issue of credit notes or debit notes and book adjustment. With the supply of free goods/materials by the service recipient, no case is made out that any credit notes or debit notes were issued or any book adjustments were made. Likewise, the words, 'any amount credited or debited, as the case may be', to any account whether called 'suspense account or by any other name, in the books of accounts of a person liable to pay service tax' would not include the value of the goods supplied free as no amount was credited or debited in any account. In fact, this last portion is related to the debit or credit of the account of an associate enterprise and, therefore, takes care of those amounts which are received by the associated enterprise for the services rendered by the service provider. 16. In fact, the definition of "gross amount charged" given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the ....
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.... that is kept in mind while issuing the said notifications and in such a situation, the AO can deny the benefit of aforesaid notifications. This argument may look to be attractive in the first blush but on the reading of the notifications as a whole, to our mind, it is not a valid argument. 18. In the first instance, no material is produced before us to justify that aforesaid basis of the formula was adopted while issuing the notification. In the absence of any such material, it would be anybody's guess as to what went in the mind of the Central Government in issuing these notifications and prescribing the service tax to be calculated on a value which is equivalent to 33% of the gross amount. Secondly, the language itself demolishes the argument of the Learned Counsel for the Revenue as it says '33% of the gross amount 'charged' from any person by such commercial concern for providing the said taxable service'. According to these notifications, service tax is to be calculated on a value which is 33% of the gross amount that is charged from the service recipient. Obviously, no amount is charged (and it could not be) by the service provider in respect of goods or materials w....
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....e in the submission of the appellant that the value of free supply of raw materials could not have been included in the value of taxable services provided by the appellant and Service Tax could not have been demanded on this value. The demand needs to be worked out after reducing the value of free supply of materials in the present case. Accordingly, the matter is remanded for re-computing the demand after deducting the value of free supply raw materials provided by the service recipient to the appellant for providing these services. 4.5 We find that the appellant has provided a Chartered Accountant's certificate as reproduced below, working out the demand of service tax after claiming the deduction on the free supply raw material as reproduced below: 4.6 The above Chartered Accountant's certificate submitted by the appellant should also be considered while re-computing the demand. 4.7 In respect of the services provided to Government authorities/ bodies pertaining to various schemes such as Jawharlal Nehru National Urban Renewal Mission (JNNURM), funded by Govt. of India and State Govt., both, and implemented by Govt. of West Bengal with assistance of Urban Local Bodics (....
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....he Hon'ble Supreme Court has finally clarified on the law in this regard, observing as follows: - "52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly, the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it 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." 4.9 Even the decision relied upon by the appellant in Himalayan Co-Op. Milk Product Union Ltd. (supra) does not say so, that the exemption could have been extended for the period prior to issuance of the exemption Notification. The said decision only observes as follows: - "8. Such Notifications by which exemption or other benefits are provided by the Government in exercise of its statutory powe....