2018 (10) TMI 1191 – CESTAT CHENNAI – TMI – Construction of residential complex service – Composition scheme – The department has taken the view that the appellants have to discharge service tax under construction of residential complex service for Swarup Heritage and under commercial or industrial construction service in the case of Jayant Tech Park – Works Contract (Composition Scheme for Payment of Service Tax) Rules 2007.
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Held that:- The Tribunal in the case of Real Value Promoters Pvt. Ltd. [2018 (9) TMI 1149 – CESTAT CHENNAI] has considered the very same issue and has held that after 1.6.2007 also, in the case of composite contracts, the levy of service tax can only be under works contract service for the period disputed in this appeal. It is not disputed that the works contract executed in these projects are of composite in nature for the reason that the appellants have availed the benefit of Notification No. 1/2006-ST which is not disputed by the department – the demand
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f Service Tax) Rules 2007. The department entertained the view that service tax is to be paid under commercial construction service from June 2006 onwards. Show cause notices were issued proposing to demand the service tax along with interest on both these projects and after due process of law, the original authority confirmed demand of service tax of ₹ 4,65,83,796/- along with interest and imposed equal penalty under section 78 of the Finance Act, 1994. Aggrieved, the appellants are before the Tribunal. 2. The ld. counsel Shri Raghavan Ramabhadran appeared and argued the matter on behalf of the appellant. He submitted that the dispute relates to two projects namely Swarup Heritage and Jayanth Tech Park project. The period involved in Swarup Heritage is May 2006 to March 2008 and that of Jayanth Tech Park is entirely after 1.6.2007. He explained that the actual construction in respect of Jayanth Tech Park commenced from August 2007 only. The appellant submits that out of 65% USD
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land owner s share of UDS. The appellant has discharged service tax on builder s share of land under the category of construction of residential complex service with effect from September 2006. They have availed abatement under Notification No.1/2006-ST dated 1.3.2006 and have not availed any CENVAT credit. The period prior to 1.6.2007 is hit by the decision of the Hon ble Supreme Court in the case of Commissioner Vs. Larsen & Toubro Ltd. – 2015 (39) STR 913 (SC). With regard to demand after 1.6.2007, the department has demanded the service tax under construction of residential complex service which cannot sustain. After 1.6.2007, appellant has discharged the service tax under works contract services under the composition scheme. He relied upon the decision of the Tribunal in the case of Real Value Promoters Pvt. Ltd. and Ors. Commissioner of GST and Central Excise, Chennai Vide Final Order Nos. 42436 to 42438/2018 dated 18.9.2018 to argue that the demand of service tax under cons
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findings in the impugned order. 4. Heard both sides. 5. As narrated above, the facts would reveal that the demand prior to 1.6.2007 cannot sustain as per the decision of Larsen & Toubro Ltd. (supra). After 1.6.2007, the appellants have discharged the service tax under works contract services under the composition scheme. The department has taken the view that the appellants have to discharge service tax under construction of residential complex service for Swarup Heritage and under commercial or industrial construction service in the case of Jayant Tech Park. The Tribunal in the case of Real Value Promoters Pvt. Ltd. (supra) has considered the very same issue and has held that after 1.6.2007 also, in the case of composite contracts, the levy of service tax can only be under works contract service for the period disputed in this appeal. It is not disputed that the works contract executed in these projects are of composite in nature for the reason that the appellants have availed the
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the fact that the method /scheme for discharging service tax on the service portion of composite contract was introduced only in 2007. 7.11 The ld. AR Shri A. Cletus has tried to counter this contention by stating that works contract service is service / activity which would be of a general nature whereas the construction activities defined in Commercial or Industrial Construction Services, Construction of Complex Service and Construction of Residential Complex etc. are of special nature. He took support of the maxim generalia specialibus non derogant – general things do not derogate special things . The counsel for appellants have submitted that as per Section 65A of the Act ibid, classification of service shall be based on the specific entries and the more specific description of service has to be preferred. He invited our attention to CBEC s Circular 128/10/2010 dated 24.8.2010 which is reproduced as under:- The matter has been examined. As regards the classification, with effect fr
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7.13 We find sustenance in arriving at this conclusion by a number of decisions of the Tribunal in which it has held as under:- a. In the case of Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company – 2018-TIOL-1096-CESTAT-DEL, the Tribunal in para 7 has held as under:- 7. We note that in the present case, the SCN was issued on 27.05.2011. On that date, both the tax entries, namely, Commercial or Industrial Construction Service and Works Contract Service, were available in the Finance Act, 1994. The SCN did mention this in the first para itself. However, the proposal for tax demand was specifically made under Commercial or Industrial Construction Service under Section 65 (105) (zzq) of the Finance Act, 1994. In such situation, we note that it cannot be a case of simple mentioning of wrong provisions of law as submitted by the Revenue. Apparently, the tax liability of composite works contract is to be considered under works contract services only as per legal position
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52 contracts which has been executed by the appellants are with material. Learned Counsel was correct in bringing to our notice that the said findings of the adjudicating authority that the appellant is eligible for abatement of 67% of the value of the goods is in itself the acceptance of the fact that the contracts were executed with material. It is also on record that the Revenue has not contested these findings of the adjudicating authority before the Tribunal. If that be so, even when the Revenue authorities are accepting the facts that the contracts executed by the appellant are nothing but works contracts, for the period in question, entire case of the Revenue in the show-cause notice stands demolished by the Apex Court in the case of Larsen & Toubro Ltd. (supra). In the said judgment, their Lordships have very categorically laid down the law that the works contract cannot be vivisected for the confirmation of demand under various other services. On this ground itself, the e
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a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of properly in goods transferred in the execution of a works contract. 10. In view of this specific decision and the admitted claim of the appellant that they are not providers of commercial or industrial construction service but of works contract service , no tax is liable on construction contracts executed prior to 1st June, 2007. 11. Insofar as demand for subsequent period till 30th September, 2008 is concerned, it is seen that neither of the t
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hed on account of the law that has been laid down by the Apex Court in the case of Larsen & Toubro Ltd., (supra), relied upon by the Ld. Counsel. So ordered. 5.2 The Ld. Counsel has been at pains to point out that on-going projects which were only in the nature of works contract prior to 01.04.2007 cannot be brought under different category of Construction Services and CICS subsequently. We find merit in his arguments. The SCN has proposed demand of service tax liability only under these two categories and not under Works Contract service. The demand confirmed in the impugned order under these categories namely under construction service for the period 10.09.2004 to 16.06.2005 under CICS for the period 16.06.2005 to 30.09.2008 cannot also sustain and are therefore set aside. So ordered 5.3 For the period 01.04.2008 to 30.09.2008, the demand confirmed is ₹ 26,88,611/-. We note that the appellant has not contested the liability under works contract for this period. The only arg
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act cannot be brought within the fold of commercial or industrial construction service or construction of complex service in the light of the Hon ble Supreme Court judgment in Larsen & Toubro (supra) upto 1.6.2007 b. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service under Section 65(105)(zzzh) ibid, Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. c. For activities of construction of new building or civil structure or new residential complex etc. involving indivisible composite contract, such services will require to be exigible to service tax liabilities under Works Contract Service as defined under section 65(105)(zzzza) ibid. d. The show cause notices in all these cases prior to 1.6.2007 and subsequent to that date for the periods in dispute, proposing service tax liability on the impugned services involving
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