TaxTMI 
TaxTMI 
2025 (11) TMI 512
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....payable thereon under Section 75 of the Finance Act, 1994 by determining the same as dues from the party under Section 73(2) of the Act; 2. I confirm demand of service tax (including cess) of Rs.6.813/- (Rupees Six Thousand Eight Hundred Thirteen only) on provision of Supply of Tangible Goods services along with interest payable thereon under Section 75 of the Finance Act, 1994 by determining the same as dues from the party under Section 73(2) of the Act. Service tax of Rs.6,813/- deposited towards aforesaid dues may be appropriated. 3. I confirm the demand of service tax (including cess) of Rs. 14,028/- (Rupees Fourteen Thousand Twenty-Eight only) on receipt of legal services of advocates along with interest payable thereon under Section 75 of the Finance Act, 1994 by determining the same as dues from the party under Section 73(2) of the Act, ibid. Service tax of Rs.14,028/-deposited towards aforesaid dues may be appropriated. 4. I confirm the demand of service tax (including cess) of Rs 7,250/- (Rupees Seven Thousand Two Hundred Fifty only) on the brokerage/ commission received along with interest payable thereon under Section 75 of the Finance Act, 199....
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....The appellant has also failed to discharge service tax liability amounting to Rs.14,028/ on Legal Consultancy Service under reverse charge mechanism and service tax amounting to Rs.7,250/ under Business Auxiliary Services. The appellant had delayed payment of Service Tax during the years 2013-14 & 2016-17 on several occasions but did not pay interest amounting to Rs.39,432/- in terms of Section 75 of the Finance Act, 1994 on such delayed payment of service tax. 2.6 A show cause notice dated 10.04.2019 was issued to the appellant, asking them to show cause as to why- "(a) The Service Tax amounting to Rs.1,37,61,663/- (Rupees One Crore Thirty Seven Lakh Sixty One Thousand Six Hundred Eighty Three only) (Including Education Cess Secondary and Higher Education Cess SBC+ KKC), as mentioned in para 26 3 above, should not be demanded and recovered from them under proviso to sub section (1) of Section 73 of chapter V of the Finance Act, 1994 (erstwhile) by invoking extended period of limitation, along with interest in terms of section 75 of the Finance Act, 1994 and a penalty should not be imposed upon them under Section 78 of Chapter V of the Finance Act, 1994 for not paying s....
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....Chapter V of the Finance Act, 1994 for not paying service tax by willfully suppressing the facts from the department with intent to evade aforesaid amount of Service Tax. The aforementioned provisions of Finance Act, 1994 is applicable for the previous period by virtue of the Section 174 of the CGST Act, 2017. (e) The interest amounting to Rs.39,432/- should not be recovered from them in terms of section 75 of the Finance Act, 1994. The aforementioned provisions of Finance Act 1994 is applicable for the previous period by virtue of the Section 174 of the CGST Act, 2017. (f) Penalty under section 77(2) of the Finance Act, 1994 (erstwhile) read with Rule 7 of the Service Tax Rules, 1994 should not be imposed upon them for non-filing of ST-3 return for the period Apr 17 to June'17 The aforementioned provisions of Finance Act, 1994 is applicable for the previous period by virtue of the Section 174 of the CGST Act,2017." 2.7 The said show cause notice was adjudicated as per the Order-in-Original dated 28.02.2020 referred in para 1 above. 2.8 Aggrieved appellant have filed appeal before Commissioner (Appeals) which has been dismissed as per the impugned order.....
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....6-SC-CX]; ⮚ Even if the material is consumed, it is considered to be deemed sale and is covered under works contract. Reliance is placed on the decision of Hon'ble M.P. High Court in the case of Agrawal Colour Advance Photo System [ 2020 (38) G.S.T.L. 298 (Μ.Ρ.)]. 3.3 Authorized Representative reiterates the findings recorded in the orders of the lower authorities. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 Impugned order records the findings as follows:- "4.1 I have gone through the facts of the case, the averments made at the time of personal hearing and all other material/ documents available on records. First of all I decide the contention of the appellant that two show cause notices cannot be issued for the same period demanding service tax on the same category of services even for separate reason. I observe that the appellant has contested the Department has earlier issued SCN dated 16.10.2018 demanding service tax amounting to Rs. 14,99,405/ on the same category of services for the period April 2013 to March 2017 by invoking extended period of limitation,....
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....teel and Pipes used in the execution of contracts has been supplied by the service recipients free of cost. Thus, even if the services rendered by the appellant falls under "works contract services then the appellant was eligible for the abatement only if fair market value of the goods supplied by the service recipients in or in relation to the execution of the works contract has been included in the total amount of the works contract. On the other hand, the appellant argued that they were eligible for the abatement of 60% on the total value of the Works Contract Services in terms of rule 2A(6)(A) of the Service Tax (Determination of Values Rules, 2006 in the light of the decision of the Hon'ble Supreme Court in the case of M/s Bhayana Builders (P) Ltd Vs CCE Delhi. 4.3 Now, I come to first point as to whether services rendered by the appellant come under works contract services or not. I have gone through the contents of the various contracts submitted by the appellant along with their appeal, which are discussed as under: 4.3.1 M/s Unitech Machiness Ltd has awarded contract No. P-311/WO/14/00078 dated 13.02.2015 to the appellant for Installation of LDO & HFO....
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.....5 M/s Meja Urja Nigam Pvt Ltd, Allahabad has awarded contract No. MUNPL/CAM /Contracts/11-12/LOA/49 dated 14.10.2016 to the appellant for the Balance Critical Works of Main Plant, CW and Offsite Civil Worles Package for Meja TPP- Fabrication & Erection Works. The clause 9.1 of the scope of work provides that the appellant shall secure the material issued by the owner free of cost. Note 7 of the schedule of items specifically provides that "Free issue material would be issued only for quantities mentioned against items No. 26(a)(i)" 4.3.6 From the aforementioned contracts provided by the appellant it is evident that all the materials are supplied free of cost to the appellant during the execution of works contract and appellant has provided consumables only. I observe that the Section 658 (54) defines "Works Contract as under: "Works contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sule of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or ....
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....ered under subclause (A), including works contract entered into for,- (i) maintenance or repair or reconditioning or restoration or servicing of any goods; or (ii) maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tilting or installation of electrical fittings of immoveable property, Service tax shall be payable on seventy per cent of the total amount charged for the works contract.] Explanation 1:- For the purposes of this rule- (a) Original works" means (i) all new constructions (ii) all types of additions and alternations to abandoned or damaged structures on land that are required to make them workable (iii) erection, commissioning or installation of plant machinery or equipment or structures, whether prefabricated or otherwise, (b) total amount" means the sum total of the gross amount charged for the works contract and fair market value of all goods and services supplied in or in relation to the execution of the works contract, whether or not supplied under the same contract or any other contract, after deducting - (i) the amount ch....
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....1872. In fact, the performance of supply of free material itself becomes a free consent between both the parties and deemed contract can be implied. Hence, the value of free issue of material shall be included even if there is no such written contract. 4.7 The appellant has relied upon judgment of the Hon'ble Supreme Court given in the case of M/s Bhayana Builders (P) Ltd Vs CCE, Delhi [2018 (10) GSTL 118 (SC)]. In the said case the respondents are engaged in providing Commercial or Industrial Construction Service' and availed benefit of Notification No. 15/2004-ST dated September 10, 2004 which provides that service tax is to be calculated on the value which is equivalent to 33% of the gross amount charged. This notification was amended vide another Notification No. 4/2005-ST dated March 01, 2005 whereby an explanation was added to the original notification which stipulates that the gross amount charged shall include the value of goods and material supplied and provided or used by the provider of construction services for providing such service. The question, therefore, which has fallen for consideration in the said case was as to whether, the value of goods/mater....
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.... From the above in can be seen that said judgment was pronounced by the Hon'ble Supreme Court for the dispute arises before introduction of the negative list regime. In the said case Hon'ble Supreme Court has observed that the "Notification No. 15/2004- ST date 10.09.2014 stipulates that service tax is to be calculated on 33% of gross amount charged from service recipient. Though Explanation added to Notification ibid w.e.f March1, 2005 included value of goods & materials supplied by service providers/assessee in gross amount charged, it did not deal with value of goods and material supplied or provided by the service recipient. However, determination of value of service portion in the execution of works contract has been substituted by the Service Tax (Determination of Value) (Second Amendment) Rules, 2012 w.c.f 01.07.2012. The definition of "total amount" provided under Explanation 1(b) of the Rule 2A(ii) of the said Valuation Rules is as under: "total amount" means - the sum total of the gross amount charged for the works contract and the fair market value of all goods and services supplied in or in relation to the execution of the works contract, ....
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....ring the course of audit conducted by the Department. Thus, it is a clear case of suppression of facts and contravention of the statutory provisions, with intent to evade payment of Service Tax. Thus, I find that extended period of limitation has been rightly invoked in this case for confirming the demand of Service Tax and imposing penalty under Section 78 of the Act. Further, I also observe that the appellant has not disclosed proper & correct information in the ST-3 returns for the relevant period, hence failed to comply with the statuary provisions of Finance Act, 1994, therefore, penalty imposed by the adjudicating authority u/s 77(2) of the Act is justified." 4.3 From the above facts we find that the issues for consideration in the present case is in respect of demand made under the category of Erection and Fabrication Services and whether the subsequent show cause notice issued for the subsequent period is barred by the limitation. 4.4 We would like to take the issue of limitation first. We find that the appellant has contested and stated that a show cause notice for the same period in respect of the same services had not been issued to the appellant. Thus, the second ....
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....04 (165) ELT 5 (MP)] Hon'ble Madhya Pradesh High Court has observed as follows: "However, if certain new facts come into the knowledge of the Department afterwards, the accepted/approved declaration/lists can always be opened and if it is found that these new facts were earlier suppressed or wilfully misstated by the assessee, then the approval of the past five years can be reopened and differential duty if any is recoverable in terms of the proviso to Section 11A(1) of the Act. Relying upon J.K. Synthetics Ltd. v. Union of India, [1981 (8) E.L.T. 328 (Del.)], it was held that principles of res judicata or estoppel, are not applicable to tax matters. In the instant case, it is observed that the assessee had not filed any price declarations during 199394, 1995-96 and 1996-97 up to 4-9-1997. They had filed a price list on 27-11-1992 claiming the assessable value on the basis of Chartered Accountant's Certificate dated 2611-1997 without adding or disclosing the profit margin to the Department. It was only when the Department verified/scrutinized their balance-sheets, it came to the knowledge of the Department that they had made certain profits during the period in question bu....
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.... contention raised by the appellant in the present appeal is that the second show cause notice dated 6th December 2006, enhanced the duty demand. This vitiates the adjudication order as well as the impugned order. We have considered the said contention but again find that the tribunal has correctly recorded that the enhanced demand was on account of examination of records and new facts coming to light for the Revenue. In these circumstances, the second show cause notice was issued. This notice was in fact akin to rectification or corrigendum to the original show cause notice. Tribunal has also mentioned that the original show cause notice did not take into account the Special Duty of Customs while computing quantum of duty evaded. It has been recorded that the second show cause notice itself was within five years from the disputed period and, thus, the question of limitation did not arise. This is not factually disputed. 4.11 In case of Arti Electrodes Pvt. Ltd [2009 (246) ELT 570 (TDel)] following has been held: 7.3 Regarding invocation of extended period, learned advocate heavily relied on decision of Hon'ble Supreme Court in the case of Nizam Sugar Factory cited supr....
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.... Surie (P) Ltd. v. C.C.E., 1986 (25) E.L.T. 79 (Tribunal) the Tribunal had held that issues already concluded in earlier proceedings could be reopened in subsequent proceedings for another period of time if emerging fresh materials give a new dimension to the matter. It was added that limitation in such cases was to be computed from the date of issue of the last show cause notice. 48. The appellants were working under the self removal procedure under which a good deal of trust is reposed on the tax payers. While filing of a price list in the prescribed form was obligatory under Rule 173C of the Rules, the requirement of prior approval was limited to only few situations. The assessee was required to declare in the price list that the particulars furnished therein were true and complete to the best of their knowledge and belief. 49. As we have discussed above the show cause notice issued in this case is a detailed one, and a reading of the same would show that the notice issued was clearly the one on the basis of which a notice could be issued within the extended period of limitation under the proviso to Section 11-A of the fact, as observed in similar circumstances....
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.... of the whole transaction cannot be assessed to sales tax. As was said in Larsen & Toubro v. Union of India [(1993) 1 SCC 364] : (SCC p. 395, para 47) :- "The cost of establishment of the contractor which is relatable to supply of labour and services cannot be included in the value of the goods involved in the execution of a contract and the cost of establishment which is relatable to supply of material involved in the execution of the works contract only can be included in the value of the goods." For the same reason the Centre cannot include the value of the SIM cards, if they are found ultimately to be goods, in the cost of the service. As was held by us in Gujarat Ambuja Cements Ltd. v. Union of India [(2005) 4 SCC 214], SCC at p. 228, para 23 :- "This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, a liberal interpretation must be given to taxing entries, this would not bring within its purview a tax on subject-matter which a fair reading of the entry does not cover. If in substance, the statute is not referable to a field given to th....
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.... and Job Works" under the heading "Labour, service and other like charges as percentage of total value of the contract" specifying 15% for fabrication and installation of elevators (lifts) and escalators, is self-contradictory, for once it is treated as a composite contract invoking labour and service, as a natural corollary, it would be works contract and not a contract for sale. To elaborate, the submission that the element of labour and service can be deducted from the total contract value without treating the composite contract as a works contract is absolutely fallacious. In fact, it is an innovative subterfuge. We are inclined to think so as it would be frustrating the constitutional provision and, accordingly, we unhesitatingly repel the same." (at para 60) 19. In Larsen & Toubro Ltd. v. State of Karnataka, (2014) 1 SCC 708 = 2014 (34) S.T.R. 481 (S.C.) = 2014 (303) E.L.T. 3 (S.C.), this Court stated :- "In our opinion, the term "works contract" in Article 366(29-A)(b) is amply wide and cannot be confined to a particular understanding of the term or to a particular form. The term encompasses a wide range and many varieties of contract. Parliament had such w....
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....tute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter. This construction, in our considered view, amounts to supplementing the charging section by including something which the provision does not state. The construction ....
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....by Section 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by Section 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the Income Tax Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to e....
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.... contract and minusing from it the value of the property in goods transferred in the execution of such works contract. This is done by adopting the value that is adopted for the purpose of payment of VAT. The rule goes on to say that the service component of the works contract is to include the eight elements laid down in the second Gannon Dunkerley case including apportionment of the cost of establishment, other expenses and profit earned by the service provider as is relatable only to supply of labour and services. And, where value is not determined having regard to the aforesaid parameters, (namely, in those cases where the books of account of the contractor are not looked into for any reason) by determining in different works contracts how much shall be the percentage of the total amount charged for the works contract, attributable to the service element in such contracts. It is this scheme and this scheme alone which complies with constitutional requirements in that it bifurcates a composite indivisible works contract and takes care to see that no element attributable to the property in goods transferred pursuant to such contract, enters into computation of service tax. ....
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....n relation to fabrication and erection of certain structures for the service recipient. These services were not qua on turnkey basis for providing the fabricated/ erected structure. Some of the material for the said structure was provided by the service recipient, and appellant undertook the fabrication/ erection jobs using the requisite material provided by him. 4.16 Hon'ble Supreme Court in the case of M/s Bhayana Builders 2018 (10) GSTL 118 (SC) has held as follows:- "15.It was argued that payment received in 'any form' and 'any amount credited or debited, as the case may be...' is to be included for the purposes of arriving at gross amount charges and is leviable to pay service tax. On that basis, it was sought to argue that the value of goods/materials supplied free is a form of payment and, therefore, should be added. We fail to understand the logic behind the aforesaid argument. A plain reading of Explanation (c) which makes the 'gross amount charges' inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credit card, deduction from account etc. It is in that....
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....that in case the assessees did not want to include the value of goods/materials supplied free of cost by the service recipient, they were not entitled to the benefit of notification dated September 10, 2004 read with notification dated March 1, 2005. It was argued that since building construction contract is a composite contract of providing services as well as supply of goods, the said notifications were issued for the convenience of the assessees. According to the Revenue, the purpose was to bifurcate the component of goods and services into 67% : 33% and to provide a ready formula for payment of service tax on 33% of the gross amount. It was submitted that this percentage of 33% attributing to service element was prescribed keeping in view that in the entire construction project, roughly 67% comprises the cost of material and 33% is the value of services. However, this figure of 67% was arrived at keeping in mind the totality of goods and materials that are used in a construction project. Therefore, it was incumbent upon the assessees to include the value of goods/material supplied free of cost by the service recipient as well otherwise it would create imbalance and disturb the ....
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....ered by sub-clause (zzq) of clause (105) read with clause (25b) and sub-clause (zzzh) of clause (105) read with clause (30a) and (91a) of Section 65 of Chapter V of the Act. This Court in the aforesaid judgment in respect of five 'taxable services' [viz. Section 65(105)(g), (zzd), (zzh), (zzq) and (zzzh)] has held as under : A close look at the Finance Act, 1994 "23. would show that the fixed taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines 'taxable service' as 'any service provided". Further, while referring to exemption notifications, it observed : ...Since the levy itself of service tax "42. has been found to be non-existent, no question of any exemption would arise." It is clear from the above that the service tax is to be levied in respect of 'taxable services' and for the purpose of arriving at 33% of the gross amount charged, unless value of some goods/materials is specifically included by the Legislature, that cannot be added." 4.17 In the case of M/s Agarwal Color Adv....
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....lue of photographic paper and consumables cannot be included in the value of photography service for the purposes of imposition of service tax. Thus, in the light of the judgment of the Apex Court in M/s. Pro Lab (supra), wherein it is held that part of processing and supplying of photographs, photo prints and negatives, which have "goods" component exigible to sales tax is constitutionally valid, it is held that value of photography service has to be determined in isolation of cost of goods such as photography paper, consumables and chemicals with which image is printed, negatives and other material which has "goods" component liable to sales tax. Accordingly, the substantial question of law No. 1 is answered in favour of the assessee and against the Revenue. 20. Having answered the substantial question of law No. 1 in favour of the assessee, the substantial question of law No. 2, which already stands concluded while dealing with the question of law No. 1, is also answered in favour of the assessee and it is held that the term 'sale' appearing in exemption Notification No. 12/2003-S.T., dated 20-6-2003 would also include "deemed sale" as defined by Article 366(29A)(b) of ....