M/s. Futura Interiors Versus Commissioner of GST & Central Excise Chennai South
Service Tax
2018 (10) TMI 403 – CESTAT CHENNAI – 2019 (24) G. S. T. L. 261 (Tri. – Chennai)
CESTAT CHENNAI – AT
Dated:- 26-9-2018
ST/267/2012 – 42495/2018
Service Tax
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
For the Appellant : Shri S. Venkatachalam, Advocate
For the Respondent : Shri B. Balamurugan, AC (AR)
ORDER
PER BENCH
Brief facts are that based on intelligence that the appellants are not paying appropriate service tax on construction activities, the SIR Group of Service Tax Commissionerate, Chennai initiated investigation and collected relevant records from the appellant. It was noticed that they provided completion and finishing services which are classifiable under commercial or industrial construction service with effect from 16.6.2005. Further, it was noticed that they split the gross value of services into material cost
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s of the appellants in July 2008 and after nearly two years a Show Cause Notice No.180/2010 (in file C.No.IV/9/232/2009 – STC Adj) dated 15.04.2010 was issued to the appellants.
2.2 It is stated in the show cause notice that on verification of records, it was noticed that the appellants bifurcated the value of purchase order in to charges for material and labour charges and paying service tax on the labour charges alone. Service tax was demanded on the materials under the category of Commercial and Industrial Construction Service (Finishing Service) by denying exemption under the Notification No.15/2004ST dt.10.09.2004 as amended by Notification No.1/2006 ST dt.10.9.2004.
2.3 The appellants submitted in their reply that they are not availing exemption under Notification No.15/2004ST dt.10.09.2004 as amended by Notification No.1/2006 ST dt.10.9.2004 but only under Notification No.12/2003 – ST dated 20.06.2003. After seeing the reply filed by the appellants the learned Commissioner r
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; service would fall under the category of „Works Contract Tax‟ Service, clearly establishes that the appellants satisfy the definition mentioned therein. To fall under its mischief the service should involves goods which is being transferred while executing the said service and it should be leviable to tax as sale of goods.
2.5 It is settled position of law that Service Tax is not liable on the goods on which tax is leviable under VAT or CST. As per Rule 2A of Service Tax Determination of Value Rules, 2006 “Value of works contract service determined shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract”.
2.6 The materials sold during the provision of Service need not be included with the value of taxable service. In this case, it is admitted by the learned Commissioner by classifying the service under „Works Contract‟ that the activity of ap
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and current years (period covered in the present appeal).
2.9 It has been held in various decisions that when the material fact is known to the department and when the departmental audit party has visited the unit, and then there could not be an allegation of suppression of fact. As the appellants have availed the benefit of Notification No.12/2003 there is no requirement on the part of the appellants to show the value of materials in the prescribed returns. Only after 2007 new format of ST3 return is prescribed. In the new format also there is no provision for showing value of materials sold. Only in case of abatement claimed under notifications, the abatement value claimed is to be shown in the ST3 returns. In this case the appellants herein have not claimed any abatement or exemption from the value of taxable service provided by them. The appellants have not included the value of the material as the said materials used could has no relevance to the Service provided and the value
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ded to demand service tax treating the work as a composite contract involving both service and supply of materials. The abatement under Notification 1/2006 has been denied to the appellant by the department stating that the materials involved are consumables and therefore the abatement is not applicable. In the show cause notice, the demand is made under commercial or industrial construction service whereas the Commissioner has confirmed the demand classifying the activity under the category of works contract from 16.6.2005 to 31.3.2008.
Needless to say that the works contract has come into effect only after 1.6.2007. The decision in the case of Larsen & Toubro Ltd. as reported in 2015 (39) STR 913 (SC) would apply to the period prior to 1.6.2007 wherein it was held that levy under works contract service prior to 1.6.2007 cannot sustain. For the period after 1.6.2007, it is seen that though the show cause notice raises the demand under commercial or industrial construction service, th
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