TaxTMI 
TaxTMI 
2024 (8) TMI 1631
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....r the provisions of Section 75 of the Finance Act, 1994. iii) I impose penalty of Rs. 10,88,32,126/- [Rupees Ten crore Eighty Eight lakh Thirty Two thousand One hundred Twenty six only]upon the said party under the provisions of Section 78 of the Finance Act, 1994; iv) For the period w.e.f. 10.05.2008 onwards I refrain from imposing penalty under the provisions of Section 76 of the Finance Act, 1994 since I have already imposed penalty under the provisions of Section 78 of the Finance Act, 1994, supra; However for the period upto 09.05.2008, I impose a penalty on the party at the rate applicable under Section 76 ibid. v) I also impose penalty of Rs. 10,000/- [Rupees Ten thousand only] upon the said party under the provisions of Section 77 of the Finance Act, 1994 All the adjudged dues should be paid forthwith." 2.1 Appellant having Service Tax Registration No. No. AAZPKO11 1HST001, is engaged in providing taxable services namely "Commercial or Industrial Construction Service and "Construction of Residential Complex Service" 2.2 During the Course of Audit, that appellant had constructed Kanshi Ram Multi Specialty Hospital Building at Greater Noida an....
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....unt of interest, and equal penalty was imposed upon the said party under the provisions of Section 78 of the Finance Act and further, penalty was also imposed upon them under the provisions of Sections 77 (2) of the Act. 2.7 Being aggrieved, appellant preferred an appeal before the CESTAT which was disposed by the Final Order No 72664/2018 dated 19.11.2018 remanding the matter to the original adjudicating authority 2.8 Impugned order has been passed in the remand proceedings. Aggrieved appellant has filed this appeal. 3.1 We have heard Shri Sanjay Kumar, Advocate for the appellant and Shri Manish Raj, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits: CASE OF THE APPELLANT ⮚For the period 01.04.2008 to 30.06.2012 - Rs. 9,87,22,153/- the demand has been made under the category of Commercial Industrial and Construction services. The contracts executed by the appellant are composite in nature, involving transfer of material and provisioning of service. Thus as per decision of Hon'ble Apex Court in the case of L & T [2015 (39) STR 913 (S.C.)], the composite contract work is rightly classifiable unde....
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....nstruction, 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; Undisputedly GNIDA is a Governmental Authority, and it is clear beyond doubt that hospital buildings are predominantly meant for use as clinical establishment ⮚demand cannot be made on the value of material/ goods transferred during execution of contract. • Entry 92C of list I of Union list specifies 'Taxes on Services' i.e., Union can levy tax On services only and not on material/ goods. • The benefit of Rule 2A or Composition Scheme should be given to the appellant Reliance is placed on the following decisions: • Nitson & Amitsu Pvt.Ltd.[2018 (4) TMI 1322- CESTAT KOLKATA] • Mehta Plast Corporation [2014 (5) TMI 1131- CESTAT NEW DELHI] • Pooja Marbles [2016 (10) TMI 620- CESTAT NEW DELHI] ⮚Extended period not invokable as the issue involved is Interpretational issue and appellant had no m....
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....he same before the adjudicating authority, for which purpose he would be afforded a reasonable opportunity." 4.3 Impugned order records findings as follows on the issue of classification of services prior to introduction of neagtiove list regime with effect from 01.07.2012: "4.6 Classification of taxable service 4.6.1 I find that one of the issues contested by the party in their defence is about classification of services rendered by the party. The party has argued that the civil construction of hospital is classifiable under "Work Contracts Service" and not under " Commercial or Industrial Construction Service" Section 65(25b) of the Finance Act, 1994 defines "commercial or industrial construction" as: (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services 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, in relation to buildin....
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....epartment has classified the said construction under "Commercial or Industrial Construction Service" whereas the party has argued the same is classifiable under "Works Contract service". A plain reading of the statutory definitions of the said two services viz. "Commercial or Industrial Construction Service", and "Works Contract Service" reveal that the said two services are intertwined amongst themselves. Both the taxable services in its definition exclude services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams, and but does not exclude services provided for construction of new building or a civil structure or part thereof primarily for the purposes of commerce or industry. Thus, I find that the service provided by the party for construction of hospital can be classified in either of taxable services i.e "Commercial or Industrial Construction Service" defined under Section 65(105) (z2q) or 'Works Contract service" defined under Section 65(105) (zzzza) ibid, as both equally merit consideration to be classified in any of the said two taxable services 4.6.3 I find that prior to introduction negative list regime; classific....
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....f better enjoying the principal supply, is considered as a supply ancillary to the principal supply 3.3 Section 65A states the principles for classification of taxable services Classification of a composite service is based on that component of the service which gives the essential character. There is a need to determine whether a given transaction is the one containing major and ancillary elements or the one containing multiple and separate major elements. In the case of a transaction containing major and ancillary elements, classification is to be determined based on the essential features or the dominant element of the transaction. A supply which comprises a single supply from an economic point of view should not be artificially split. The method of charging or invoicing does not in itself determine whether the service provided is a single service or multiple services. Single price normally suggests a single supply though not decisive. The real nature and substance of the transaction and not merely the form of the transaction should be the guiding factor for deciding the classification 3.4 .........Specifying a service separately as a taxable service does not n....
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....-II, cannot be relied upon in the instant case as the dispute in it was regarding classification between "Works contract service" and "Erection, Commissioning and Installation service", which is not the subject matter of discussion in the instant case. 4.6.9 Further, Hon'ble CESTAT, Allahabad in its Final Order ST/A/72664/2018- CU[DB) dated 19.11.2018, has held that "After considering the above grounds we find that in terms of the Hon'ble Supreme Court's decision in the case of Commissioner of Central Excise & Customs v. Larsen &Toubro Ltd. & Others [2015 (39) STR 913 (SC)|. It has been held that no tax liability would arise in respect of Works Contract Service' for the period prior to 1^st July, 2006. As such we are of the view that entire issue needs to be examined in the light / of the said decision of the Hon'ble Supreme Court, for which matter the appeal is required to be remanded". On going through the impugned show cause notice, I notice that the demand period involved in the impugned show cause notice is post 01.07.2006 i.e. period involved is 01.07.2008 to 31.08.2013. As such, I find that the cited decision of Larsen & Turbo vis-a-vis ....
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....ow cause notice had not invoked the taxable entry rendering the determination of tax liability to be contrary to the provisions of Section 73 of the Finance Act, 1994. It was submitted by the learned Counsel that further arguments should be contingent upon a decision on these two issues. 5. Learned Authorised Representative was of the opinion that the facts of the appellant are distinguishable from the facts relating the judgment delivered by the Hon'ble Supreme Court in re M/s. Larsen & Toubro Ltd. According to him, the non-taxability of works contract service prior to 1^st June, 2007 was not contended before the adjudicating authority, who, therefore, had been denied the opportunity of ascertaining the nature of contract entered into by the appellant and the supply of goods as a component of the contract. He, therefore, submitted that the contracts require re-examination for which matter would have to be remanded back to the original authority for scrutiny. 6. On the claim of the appellant before the original authority that they were providers of 'works contract service', which is taxable only from 1st June, 2007, the finding in the impugned order that - 'having....
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....services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract.' 10. In view of this specific decision and the admitted claim of the appellant that they are not providers of 'commercial or industrial construction service' but of 'works contract service', no tax is liable on construction contracts executed prior t....
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....at the show cause notice lays down the foundation of the proceedings initiated, hence demand could have been made within the parameters specified in the show cause notice. As no demand has been made by the revenue by classifying the services provided by the appellant under the category of work contract services, then the same could not have been determined under the said category. 4.8 In case of 3I Infotech Ltd. [2018-TIOL-3559-CESTAT-MUM] Mumbai bench has observed as follows: "10.13 In respect of Commissioner confirming the demand under the category of Intellectual Property Services for period prior to 16.05.2008 and under the category Information Technology Services from 16.05.2008 in respect of 1st show-cause notice party has relied upon the decisions in the following cases to argue that such confirmation of demand is not tenable:- (i) Mahakoshal Beverages Pvt. Ltd. v. CCE, (2006) 6 STR 148 (Tri. - Bang.) affirmed by Karnataka High Court in CCE vs. Mahakoshal Beverages Pvt. Ltd (2014) 33 STR 616 (Kar) (ii) Balaji Contractor v. CCE (2017) 52 STR 259 (Tri-Del.))]. (iii) Enpee Earthmovers vs. C.C.E., Goa (2012) 27 S.T.R. 48 (Tri. - Mumbai) ....
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.... 10. It is pertinent to note here that the first show cause notice dated 19th October 2009 contained a demand for service tax under the taxable service of "Management, Maintenance and Repair" and the rest of the three notices contain a demand under classifiable service "Information Technology Software". In the facts of the case, the demand was made on account of services provided by the assessee in respect of the supply of third¬party software, software developed in-house or customised software. The assessee had temporarily transferred the right to use the said software to their clients. Thus, prior to 16th May 2008, such service was classifiable under the category of "Intellectual Property Service" and with effect from 16th May 2008, it was classifiable under the category of 'Information Technology Software". In fact, the management, maintenance and repair services of computer hardware as well as software under the annual maintenance contract was covered by the category of "Management, Maintenance or Repair" services which was defined under Section 65(64) of the Finance Act. Thus, the classification mentioned in the first show cause notice was completely erroneous. Therefore....