TaxTMI 
TaxTMI 
2026 (4) TMI 1430
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....ors, windows etc.). 1.1. Based on specific information indicating evasion of Service Tax, an investigation was initiated against the appellant by conducting a search, by the officers of the Directorate General of Central Excise Intelligence, Kolkata Zonal Unit. During the course of search, various incriminating records / documents were recovered from the appellant. 1.2. On completion of the investigation, a Show Cause Notice bearing F. No. 135/KZU/KOL/ST/2013/6868 dated 21-10-2013, was issued to the appellant demanding service tax, for the period from 2008-09 to 2012-13. 1.3. After due process, the said notice was adjudicated by the Commissioner vide impugned Order-in-Original No. 17/Commr/ST-II/Kol/2015-16 dated 30.10.2015, wherein the Ld. Commissioner of Service Tax, Kolkata-II Commissionerate, has confirmed the demand of Service Tax, along with interest, against the appellant. He also imposed an equal amount of tax as penalty. 1.4. Aggrieved by the confirmation of the demand of Service Tax, along with interest and penalty thereon, as confirmed in the impugned order, the appellant has filed this appeal. 2. During the course of hearing, the appellant submitted that ....
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....y have also paid VAT/WCT to the extent of Rs. 3,11,88,476/-, which needs to be excluded from the gross amount charged, in terms of Explanation (a) of Rule 2A(i) of the Service Tax (Determination of Value) Rules 2006. To this extent, they have submitted the details of VAT/WCT paid, as under: Year VAT/WCT Paid (Rs.) 2008-09 36,04,190.00 2009-10 86,25,490.00 2010-11 1,25,84,305.00 2011-12 32,43,367.00 2012-13 31,31,124.00 TOTAL 3,11,88,476.00 2.4. The appellant submitted a Chartered Accountant's Certificate certifying the value under Rule 2A (i) of the Service Tax (Determination of Value) Rules 2006, Service Tax paid and payable; it is their stand that if the aforesaid amount are excluded from the gross amount charged and the taxable value is determined in terms of Rule 2A(i) of the Service Tax (Determination of Value) Rules 2006, then there is no non-payment/short payment of service tax during the impugned period. According to the appellant, they have paid excess Service Tax amounting to Rs. 61,538/-, for the said period, as per the above calculation. 2.5. The appellant mentions that the Ld. adjudicating authority has held that the appe....
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....s i.e. demands for the period 2008-09 to 30-09-2011 is barred by limitation. 2.8. In view of the above submissions, the appellant prayed for reworking the duty liability, if any, for the normal period of limitation, by excluding the value of the goods and VAT/WCT from the gross amount charged. 3. The Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order. It is the submission of the Ld. Departmental Representative that the appellant has availed CENVAT Credit on the 'inputs' and hence, are not eligible for the benefit of the Notification No. 01/2006-ST dated 01.03.2006; that they have not exercised the option to avail the composition Scheme. Hence, it is his contention that the ld. adjudicating authority has rightly demanded Service Tax on the gross value charged by the appellant. 4. Heard both sides and perused the appeal records. 5. We observe that, in the instant case, the appellant has paid Service Tax under the category 'Commercial or Industrial Construction Service', on 33% of the total amount charged, after availing abatement, in terms of Notification No. 1/2006-ST, dated 01-03-2006 . They have also paid Service Tax unde....
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..../2007-ST, dated 22-05-2007 is not extended, then the value of service needs to be determined in terms of Rule 2A(i) of the Service Tax (Determination of Value) Rules,2006 by excluding the value of the goods and VAT/WCT from the gross amount charged. However, the Department, in the present case, has demanded Service Tax by including the value of the goods used in execution of the 'works contract', which is legally not sustainable. In support of our view, we rely upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Cus. & C. Ex. &S.T., Noida Versus Interarch Building Products Pvt. Ltd., reported in 2023 (73) G.S.T.L. 433 (S.C.) / (2023) 6 Centax 40 (S.C.) wherein, under similar facts and circumstances, the Hon'ble Apex Court has held that the value of service has to be determined as per Rule 2A Service Tax (Determination of Value) Rules 2006. For ready reference, the relevant part of the said judgment is reproduced below: "8.4 It is required to be noted that thereafter the above service elements have found a statutory recognition as part of Rule 2A of the Service Tax (Determination of Value) Rules, 2006 w.e.f. 1-6-2007 which has been referred to ....
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....ules, 2007 came to be introduced, as per Rule 3(1) and notwithstanding anything contained in Section 67 of the Act and Rule 2A of the Rules, 2006, the person liable to pay service tax in relation to works contract service shall have the option to discharge the service tax at the rate specified in Section 67 of the Act, by paying an amount equivalent to 2% of the gross amount charged for the works contract. Explanation specifically provides that gross amount charged for the works contract shall not include the VAT or sales tax, as the case may be paid on transfer of property in goods involved in the execution of the said works contract. At this stage, it is required to be noted that post 1-7-2012 Rule 2A specifically provides that the taxable service shall not take Cenvat credit of duty or cess paid on inputs used in or in relation to said works contract, under the provisions of Cenvat Credit Rules, 2004. 8.8 It is the case on behalf of the respondent-assessee that as in Rule 2A and even in the Composition Scheme the word used are subject to the provisions of Section 67 the assessee had an option to pay the service tax on the entire contract value i.e. on gross amount charg....
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....dgment and order passed by the CESTAT is hereby quashed and set aside and it is held that the assessee is not entitled to take the total contract value which includes both goods and services and remit service tax on the value as works contract service and, in the process, also entitled to avail the Cenvat credit on the entire amount. It is observed and held that the assessee has to pay the service tax on the value of services as per Rule 2A of the (Determination of Value) Rules, 2006 and thereafter to avail the Cenvat credit accordingly. However, it is also observed and held that demand for the period January, 2007 to May, 2007 is unsustainable. 10.1 In that view of the matter now the service tax needs to be computed in terms of Rule 2A of the (Determination of Value) Rules, 2006 and as the assessee has not opted for the composition scheme, the matter is remitted back to the CESTAT for re-computation of the demands in terms of Rule 2A. 11. As observed hereinabove the Tribunal has also not decided the issue of extended period of limitation. Therefore, while quashing and setting aside the impugned judgment and order passed by the CESTAT, the matter is remitted back ....