2014 (7) TMI 328 - AT - Service Tax

Demand of service tax - commercial or industrial construction and construction of complex services - appellant had remitted service tax after availing abatement of 67% under exemption Notification No. 15/2004-ST dated 10/09/04 as amended by Notification No. 18/2005-ST dated 17/06/05 - Revenue contend that appellant was disentitled to avail abatement benefits since it failed to disclose the gross consideration received including the value of supplies made free of cost by service recipients to the appellant for incorporation into construction services provided - Held that - for availment of exemption benefits under the relevant Notifications including the one in issue it is not necessary to include in the taxable value the value of supply of goods free of cost by a service recipient to a service provider which are incorporated into constructions during rendition of tenable services - Following decision of Bayana Builders Pvt. Ltd. vs. CST Delhi 2013 (9) TMI 294 - CESTAT NEW DELHI - appellant shall be entitled to refund of the amounts remitted pursuant to the proceedings which culminated in the adjudication order subject to entitlement for such refund in accordance with law - Decided in favour of assessee.

Summary

Issues:
1. Challenge to service tax demand, appropriating deposited amounts, interest, and penalties.
2. Initiation of proceedings under extended period of limitation for taxable services.
3. Disentitlement to abatement benefits due to failure to disclose gross consideration.
4. Interpretation of exemption Notifications regarding taxable value.
5. Application of decision by Larger Bench in a similar case.
6. Quashing of adjudication order and entitlement to refund.

Analysis:
1. The appellant challenged the adjudication order confirming a service tax demand, appropriation of deposited amounts, interest under Section 75, and penalties under Sections 76 and 78 of the Finance Act, 1994. The issue revolved around the correctness of the demand and the imposition of interest and penalties.

2. Proceedings were initiated against the appellant by a show cause notice dated 29/11/07, invoking the extended period of limitation under the proviso to Section 73(1) of the Act. The notice alleged that the appellant had provided taxable services related to commercial or industrial construction and construction of complex services during specific periods. The contention was that the appellant failed to disclose the gross consideration received, leading to the initiation of proceedings under the extended period of limitation.

3. The appellant was alleged to be disentitled to avail abatement benefits as it did not disclose the gross consideration received, including the value of supplies made free of cost by service recipients for incorporation into construction services provided. This failure to disclose the complete details impacted the eligibility of the appellant for abatement benefits.

4. The Tribunal referred to the decision in Bayana Builders Pvt. Ltd. vs. CST, Delhi, where it was clarified that for availing exemption benefits under relevant Notifications, including the one in question, it was not mandatory to include the value of goods supplied free of cost by a service recipient in the taxable value. This interpretation was crucial in determining the taxable value for exemption benefits.

5. Following the decision in Bayana Builders Pvt. Ltd. case, the Tribunal allowed the appeal and quashed the adjudication order dated 31/07/2008 passed by the Service Tax Commissioner, New Delhi. The decision of the Larger Bench was applied to the present case, providing clarity on the issue at hand.

6. Consequently, the appellant was entitled to a refund of the amounts remitted in response to the proceedings leading to the adjudication order. The entitlement to such a refund was subject to compliance with the legal requirements for claiming a refund as per the law. The adjudication order was effectively set aside, and the appellant's right to a refund was recognized.

Conclusion:
The judgment addressed various issues concerning service tax demand, abatement benefits, interpretation of exemption Notifications, and the application of a decision by a Larger Bench. The Tribunal quashed the adjudication order and allowed the appeal, granting the appellant the entitlement to a refund subject to legal requirements. The decision provided clarity on the taxable value for exemption benefits and highlighted the importance of disclosing complete information to avail of such benefits.