TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 615
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....he period from 2005 - 06 to 2006 - 07 by including the full rate of service tax in the gross value instead of including the actual service tax payable i.e. 33% of the service tax resulting in short-payment of service tax of Rs.9,65,893/-; wrongly reversed service tax payment of Rs.9,00,000/- paid in respect of 4 residential flats which were part of commercial complex "Reflection" at Santhome, Chennai; wrongly excluded the land (UDS) value received from the customers while computing the value for payment of service tax @2% under composition scheme in respect of residential complex at ECR, Muthukadu, resulting in short-payment of service tax of Rs.6,00,532/- for the period from July 2007 to March 2008 and wrongly utilized the CENVAT credit of Rs.3,60,973/- accrued in September 2005 for payment of service tax for the period from June 2005 to August 2005 resulting in short-payment of service tax of Rs.3,60,973/-. Hence Show Cause Notice dated 29.6.2010 was issued to the appellant demanding an amount of Rs.9,65,893/- short-paid and Rs.18,61,505/- towards other demands besides proposing to impose penalty under sections 76 and 78 and interest under section 75 of the Finance Act, 1994. Aft....
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.... impugned order may be set aside. 3.2 Ld. A.R. Shri N. Satyanarayanan who appeared for revenue, reiterated the point given in the findings of the impugned order. 3.3 After hearing both sides and perusing the records, we find that the impugned period is from June 2005 to March 2008. The issue whether Service Tax is payable on the composite services of 'Works Contract Service', 'Construction of Residential Complex Service' and 'Architecture Service' Construction of Residential Complex Service' during the said period is no longer res integra. The issue of work contract was examined in detail by a Coordinate Bench of this Tribunal in the case of M/s. RPP Infra Projects Ltd. Vs Commissioner of GST & Central Excise Final Order Nos. 40564-40575/2024, Dated: 30.05.2024. The Bench speaking through one of us [Shri M Ajit Kumar, Member (Technical)], held as under: "3. It may at this stage be helpful to chronicle the important events and judgments that would provide the legal framework for the discussions on the dispute during the impugned time period. 3.1 Chronological dates and events pertaining to statutory provisions/ notifications Date Development Remarks ....
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....a) "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 services in relation to, residential complex. Sec. 65 (91a) "residential complex" means any complex comprising of- (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction....
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.... 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 classified under CICS or CCS and the benefit of composition scheme is not applicable. CBIC Circular No. 98/1/2008 Dt. 04.01.2008 A service provider who paid service tax prior to 01.06.07 for the taxable service, namely, erection, commissioning or installation service, commercial or industrial construction service or construction of complex service, as the case may be, is 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, is not entitled to avail the Composition Scheme. 04.01.2008 CBIC clarified tha....
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....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 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 Exe....
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....cts 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 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) Whil....
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.... 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'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 p....
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.... 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 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." 4. As discussed in the order only service simpliciter (not involving supply of goods) is liable to Service Tax prior to and even after 01.06.2007, as held by the Hon'ble Supreme Court in L&T Kerala (supra) and the decisions of the Tribunal cited above. Accordingly, the services of Construction of Residential Complex Service rendered by the appellant during the period from June 2005 to March 2008 in the impug....