2018 (11) TMI 1467 – CESTAT CHENNAI – TMI – Erection, Commissioning and Installation Service – Non-payment of Service tax – works contract service – non-payment on the ground that the services performed for road, bridges etc. is excluded from the service tax purview under section 65(105)(zzzza) of the Finance Act, 1994 – period involved in the present case is July 2007 to September 2011 – Held that:- The contract entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service.
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The Tribunal in the case of Real Value Promoters Ltd. [2018 (9) TMI 1149 – CESTAT CHENNAI] had occasion to analyze the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are p
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A. Cletus, Addl. Commissioner (AR) for Revenue ORDER Per Bench The issue involved in all these appeals being the same, they were heard together and are disposed by this common order. The parties herein are referred to as assessee and department for the sake of convenience. 2. The assessees are engaged in execution of contracts for erection, installation of electrical poles for street lights etc. for Government and other local bodies namely Municipalities and Panchayats etc. During audit of accounts, it was observed that the assessee was paying service tax under erection, commissioning or installation services upto 30.6.2007 and from 1.7.2007 they opted to pay service tax under works contract service. It was noticed that while paying service tax under works contract service, they have short-paid service tax to the tune of ₹ 1,64,159/- upto March 2008 and also noted that they stopped paying service tax under works contract service on the ground that the services performed for road
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No.. 187 & 188/2012 dt. 30.10.2012 SCN No. 290/2011 dt. 25.8.2011 andSCN No. 88/2012 dt. 4.4.2012 April 2010 to March 2011 Apr. 11 to Sep. 11 Rs.27,79,551/- Rs.33,02,028/- 3. On behalf of the assessee, ld. counsel Shri J. Shankar Raman submitted that in Appeal No. ST/397/2011, the period involved is from July 2007 to September 2008 and the demand made in the show cause notice is under erection, commissioning and installation services. As per the decision of the Tribunal in the case of Real Value Promoters Ltd. Vs. CCE – 2018-TIOL-2867-CESTAT, Chennai, the demand under erection, commissioning and installation service for composite contracts will not sustain. In the said show cause notice, there is an allegation of irregularly availed CENVAT credit on rent-a-cab service also. He submitted that the period is prior to 1.4.2011 and the said services are eligible for credit. In the other show cause notices, the demand is made under ECIS and the original authority confirmed the demand aga
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e department. 5. After hearing both sides, it is brought to light that the period involved in the present case is July 2007 to September 2011. The demand has been raised in the show cause notice under ECIS. The contract entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service. The Tribunal in the case of Real Value Promoters Ltd. (supra) had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1.6.2007, demand in respect of composit
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x will be levied at only 2 per cent of the total value of the words contract . 7.10 The issue was analyzed by the Hon ble Apex Court in Larsen & Toubro case (supra) and held that there can be no levy of service tax on composite contracts (involving both service and supply of goods) prior to 1.6.2007. This read together with the budget speech as above would lead to the strong conclusion that composite contracts were brought within the ambit of levy of service tax only with effect from 1.6.2007 by introduction of Section 65(105)(zzzza) i.e. Works Contract Services. As pointed out by the ld. counsels for appellants, there is no change in the definition of CICS/CCS/RCS after 1.6.2007. Therefore only those contracts which were service simpliciter (not involving supply of goods) would be subject to levy of service tax under CICS / CCS / RCS prior to 1.6.2007 and after. Our view is supported by the fact that the method / scheme for discharging service tax on the service portion of composi
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on of aforesaid 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 1-6-2007. This is because works contract describes the nature of the activity more specifically and, therefore, as per the provisions of Section 65A of the Finance Act, 1994, it would be the appropriate classification for the part of the service provided after that date. 7.12 Thus, for example, while construction of a new residential complex as a service simpliciter would find a place under section 65(105)(30b) of the Act, the same activity as a composite works contract will require to be brought under section 65(105)(zzzza) Explanation (c). For both these categories for the definition of residential complex, the definition given in section 65(105)(91a) will have to be adopted as discussed above will have to be taken into account. 7.13 We find sustenance in arriving at this conclusion by a number of decisions of the
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evenue submitted that the respondent were engaged in construction services liable to tax under tax entry Section65(105) (xxq). The grievance of the Revenue is with reference to commercial nature of the construction undertaken by the respondent and not on the correct classification of taxable activity. b. In the case of Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai – 2018-TIOL-360-CESTAT-MUM, in respect of identical issue for the period from 2005 to 2012, the Tribunal in para 7 has held as under:- 7. On careful consideration of the submissions made by both the sides, we find that the issue falls for consideration is whether the services rendered by the appellant in respect of 52 contracts entered with various Govt. authorities need to be taxed under MMRC/CICS/ECIS or otherwise. It is on record and undisputed that the adjudicating authority has specifically held that all the 52 contracts which has been executed by the appellants are with material. Learned Counse
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so. c. In the case of URC Construction (P) Ltd. Vs. Commissioner of Central Excise, Salem – 2017 (50) STR 147, the Tribunal in paragraphs 9, 10 and 11 has held as under:- 9. The Hon ble Supreme Court in re Larsen & Toubro & Ors. has decided thus 24. A close look at the Finance Act, 1994 would show that the five 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 . All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service r
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On the contrary, the submission of the appellant that they had been providing works contract service had been rejected by the adjudicating authority. Therefore, even as the services rendered by them are taxable for the period from 1st June, 2007 to 30th September, 2008 the narrow confines of the show cause notices do not permit confirmation of demand of tax on any service other than commercial or industrial construction service . It is already established in the aforesaid judgment of the Hon ble Supreme Court that the entry under Section 65(105)(zzd) is liable to be invoked only for construction simpliciter. Therefore, there is no scope for vivisection to isolate the service component of the contract. d. In the case of Logos Construction Pvt. Ltd. Vs. Commissioner of Central Excise as reported in 2018 (6) TMI 1361, the Tribunal has held as under:- 5.1 The payment upto 01.06.2007 will get extinguished on account of the law that has been laid down by the Apex Court in the case of Larsen
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#8377; 82 lakhs under this category after the visit of the departmental officers and therefore an amount of ₹ 36,88,611/- demanded in the impugned order should be considered as having been discharged. We find merit in his argument and hence the demand of ₹ 26,88,611/- under works contract service for the period 01.04.2008 to 30.09.2008 is required to be considered as having been paid, albeit subsequent to the visit of the officers. However, the interest liability if any that arise on this amount if not paid already will have to be discharged by the appellants. So ordered. 8. In the light of the discussions, findings and conclusions above and in particular, relying on the ratios of the case laws cited supra, we hold as under:- a. The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or
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ction of Complex Service, cannot therefore sustain. In respect of any contract which is a composite contract, service tax cannot be demanded under CICS / CCS for the periods also after 1.6.2007 for the periods in dispute in these appeals. For this very reason, the proceedings in all these appeals cannot sustain. 5. Following the above decision, we are of the considered opinion that the demand of service tax under ECIS cannot sustain after the period 1.6.2007. The denial of CENVAT credit on rent-a-cab service being prior to 1.4.2011 is unjustified and the assessees are eligible to avail CENVAT credit on the same. 6. From the discussions made above, we hold that the impugned orders cannot sustain and are set aside. The appeals filed by the assessee are allowed with consequential relief, if any. The appeals filed by Revenue are dismissed. The cross-objections filed by the assessee are disposed accordingly. The miscellaneous application filed by Revenue for change of cause title is allowed
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