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TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1405
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....d of 19,800 sq. ft. (55% of 36,000 sq. ft.) was retained by Mahalakshmi Trust. Subsequently, Mahalakshmi Trust requested the appellant to construct residential complex in 19,800 sq. ft. and allot 11,000 sq. ft. to Mahalakshmi Trust. The appellant was free to sell the balance 8,800 sq. ft. Accordingly, the appellant constructed the residential complex and sold three flats and paid service tax after deducting land cost, stamp duty/fee from the value. However, they have not paid service tax on 11,000 sq. ft. for the construction which was done for the land owner. Hence Show Cause Notice dated 28.7.2010 came to be issued. After due process of law, the Ld. Adjudicating Authority demanded Service Tax along with interest and appropriated Rs.6,05,730/- already paid by the appellant towards the same. He also imposed equal penalty under section 78 of the Act and penalty of Rs.5,000/- under section 77 of the Act. Against such order, the appellant preferred an appeal before the Commissioner (Appeals) and vide the impugned order, the appeal was dismissed. Hence this present appeal before the Tribunal. 3. The learned Advocate Shri M.N. Bharathi appeared for the appellant and Ld. Authorized Re....
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....marily in, commerce or industry, or work intended for commerce or industry, but does not include road, airport, railway, transport terminal, bridge, tunnel, long distance pipeline and dam. 10.09.2004 67 % abatement (exemption from value) provided for. Notification 15/2004 Service Tax Dt. 10.09.2004 16.06.2005 "Construction service" renamed as "commercial or industrial construction service. Sec. 65 (25b) "commercial or industrial construction service" means - (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 building or civil structure; or (d) repair, alteration, renovation or restoration of, 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 wit....
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....6.2007 Introduction of Service Tax on "works contracts" Sec. 65 (105) (zzzza). Taxable service means any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. - For the purposes of this sub-clause, "works contract" means a contract wherein, - (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, - (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire 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 pi....
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....e purpose of introduction of this Explanation during Budget has been explained in CBIC's letter 334/1/2010 TRU Dt. 26.02.2010, as under; In the definition of the taxable services 'Construction of Complex service' [section 65 (105) (zzzh)], and 'Commercial or industrial construction service' [section 65 (105) (zzq)], it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly. 24.08.2010 The clarification issued on 04.01.2008 is modified. It is clarified that the classification of CICS and CCS should be changed to WCS after 01.06.2017. CBIC Circular No. 128/10/2010 Dt. 24.08.2010 Classification of services would undergo a change in case of long term contracts even though part of the service 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....
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....nderstanding. The actual provisions may be looked into. 3.2 Chronological dates of important Judgements. S.No. Judgement Remarks 1 Nagarjuna Construction Co. Ltd. Vs GOI - 2012 (28) STR 561 SC, decided on 09/11/2012 The Hon'ble Supreme Court Held that the appellant, who had paid service tax prior to 01.06.07 for the taxable services, namely, erection, commissioning or installation service, commercial or industrial construction service or construction of complex service, was 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 and hence, was not entitled to avail of the Composition Scheme. Validity of CBIC circular Dated 04/01/2008 was upheld. 2 Larsen & Toubro Ltd. and others Vs State of Karnataka [2014 (34) S.T.R. 481 (S.C.)]. Decided on 26/09/2013. The Hon'ble Supreme Court held that building contracts are species of the works contract. It summed up the legal position regarding the difference between 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 s....
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....the term or to a particular form. The term encompasses a wide range and many varieties of contract. Parliament had such wide meaning of "works contract" in its view at the time of the Forty-sixth Amendment. The object of insertion of clause (29A) in Article 366 was to enlarge the scope of the expression "tax on sale or purchase of goods" and overcome Gannon Dunkerley (1) [State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd., AIR 1958 SC 560 : 1959 SCR 379]. Seen thus, 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. The additional obligations in the contract would not alter the nature of contract so long as the contract provides for a contract for works and satisfies the primary description of works contract. Once the characteristics or elements of works contract are satisfied in a contract then irrespective of additional obligations, such contract would be covered by the term "works contract". (emphasis added) II) A contract which has both the elements of goods and service is a works contract. The Hon'....
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.... "7.10 The issue was analyzed by the Hon'ble Apex Court in Larsen & Toubro case (supra) and held that there can be no levy of service tax on composite contracts (involving both service and supply of goods) prior to 1.6.2007. This read together with the budget speech as above would lead to the strong conclusion that composite contracts were brought within the ambit of levy of service tax only with effect from 1.6.2007 by introduction of Section 65(105)(zzzza) i.e. Works Contract Services. As pointed out by the ld. counsels for appellants, there is no change in the definition of CICS/CCS/RCS after 1.6.2007. Therefore only those contracts which were service simpliciter (not involving supply of goods) would be subject to levy of service tax under CICS / CCS / RCS prior to 1.6.2007 and after. Our view is supported by the fact that the method / scheme for discharging service tax on the service portion of composite contract was introduced only in 2007. (emphasis added) This judgment was followed by this Tribunal in Jain Housing 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 invo....