2014 (10) TMI 62 - AT - Service Tax

Construction service - joint venture of NTPC and Reliance Infrastructures Ltd. - construction of guest house building - Held that - It is however seen that in the concluding lines of the said para it has not been categorically stated as to under which category of service the demand is confirmed although it does give an indication that the adjudicating authority possibly indented to confirm the said demand under the category of commercial or industrial construction service. Even so the appellants do have a point that the adjudicating authority should have categorically mentioned without any ambiguity as to under which taxable service the said component of impugned demand is being confirmed by him. Valuation - inclusion of value of free supplies - Benefit of Notification No. 1/2006-ST dated 1.3.2006 - appellant had paid service tax on 33% of the gross amount - Held that - adjudicating authority needs to now take into account the judgment of the said CESTAT in case of M/s. Bhayana Builders 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) to re-adjudicate this component of the demand. While doing so the adjudicating authority will, inter alia, need to consider as to what part, if any, of this component of demand relates to completion or finishing work because in case of completion or finishing services, the benefit of Notification No. 1/2006-ST is not available. Needless to say, at the time de-novo of adjudication the appellants will be at liberty to stake their claim for benefit of Notification No. 12/2003-ST and submit the necessary evidence relating thereto to enable the adjudicating authority to take a view whether in the alternative, they will be eligible for the benefit of the said Notification (i.e. the Notification No.12/2003-ST). - matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
- Early hearing of stay application
- Confirmation of service tax demand
- Imposition of penalties under Sections 76, 77, and 78 of Finance Act 1994
- Categorization of demand under different taxable services
- Dispute regarding taxability of services provided
- Benefit of Notification No. 1/2006-ST
- Inclusion of value of free supplies in gross amount
- Application of Notification No. 12/2003-ST
- Re-adjudication of the demand

The judgment addressed an application for early hearing of a stay application filed by the appellants against an Order-in-Original confirming a service tax demand of Rs. 94,31,109 along with interest and penalties under Sections 76, 77, and 78 of the Finance Act 1994. The appellants, a joint venture of NTPC and Reliance Infrastructures Ltd., provided services to NTPC and RITES. The Order-in-Original confirmed a demand amounting to Rs. 1,59,97,633, dropping a part of the initial demand. The demand was categorized under different services, and the appellants contested certain components of the demand.

The judgment highlighted that the adjudicating authority did not clearly specify under which category of service the demand related to the construction of the guest house building for NTPC was confirmed. The appellants argued that the demand for construction of switch gear building and finishing work of service building was confirmed on the entire gross amount received, despite paying service tax on only 33% of the amount. They contended that the value of free supplies was not linked to the services rendered, affecting the applicability of Notification No. 1/2006-ST. The judgment acknowledged the need to consider the judgment of the Tribunal in the case of Bhayana Builders regarding the inclusion of free supplies for abatement purposes.

Regarding the construction of CISF barrack buildings, similar issues were identified, necessitating a reevaluation by the adjudicating authority. Consequently, the appeal was allowed, the impugned order was set aside for certain demands, and the case was remanded for de novo adjudication to determine the demand and penalties based on the observations made. The appellants were granted an opportunity to present their case during the re-adjudication process.