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2015 (2) TMI 311 - AT - Service TaxDisallowance of the abatement of 67% from the gross amount of the contract under Notification No.15/2004-ST, dated 10.09.2004 - value of free supplies has not been included in the gross amount charged - wilful mis-statement and suppression of facts - Held that - As the service was rendered under a work contract, the same is not liable to service tax prior to 01.06.2007 when works contract service section 65(zzzza) of Finance Act, 1994 was introduced, it is to state that the classification of service is to be determined as per the definitions of various taxable services prevalent during the relevant period and merely because the classification changes with the introduction of a taxable service under which an existing service gets more specifically covered in no way means that the said service was not necessarily taxable during the period prior thereto. As has been conceded by the ld. Departmental Representative, denial of 67% abatement by the adjudicating authority on the ground that value of free supplies was not included in the gross amount charged is no longer sustainable in the light of the CESTAT Larger Bench judgment in the case of Bhayana Builders (P) Ltd. (2013 (9) TMI 294 - CESTAT NEW DELHI (LB)). Accordingly, we set aside the impugned order and remand the matter to the adjudicating authority for de novo adjudication inter alia giving effect to the CESTAT judgment in the case of Bhayana Builders (P) Ltd. (supra) for the purpose of deciding the appellants eligibility for 67% abatement under Notification No.15/2004 / No.1/2006 as the case may be - Matter remanded back - Decided in favour of assessee.
Issues:
1. Duty demand confirmation along with interest and penalty under the Finance Act, 1994. 2. Classification of services under Commercial or Industrial Construction Service (CICS) and abatement under Notification No.15/2004-ST. 3. Applicability of service tax prior to 01.06.2007 under Works Contract service and eligibility for abatement under Notification No.14/2004-ST. 4. Interpretation of taxable services prevalent during the relevant period and impact of changes in classification. 5. Denial of 67% abatement on the ground of free supplies not included in the gross amount charged. Analysis: 1. The judgment addressed the appeal against the confirmation of duty demand, interest, and penalty under the Finance Act, 1994. The appellants contested an Order-in-Original that confirmed a duty demand of a specific amount for a defined period, along with interest and an equal penalty. An amount already deposited by the appellants was also appropriated. 2. The issue of classification of services under Commercial or Industrial Construction Service (CICS) was central to the case. The Commissioner disallowed abatement under Notification No.15/2004-ST, citing non-inclusion of the value of free supplies in the gross amount charged. The appellants were accused of wilful mis-statement and suppression of facts. 3. The appellants argued that the service was not taxable before 01.06.2007 under Works Contract service and claimed eligibility for 67% abatement under Notification No.14/2004-ST. They relied on a Tribunal decision applicable to their case. However, the Tribunal highlighted that changes in service classification do not necessarily imply non-taxability before the introduction of specific taxable services. 4. The judgment referred to a Delhi High Court decision emphasizing the payment of service tax on the service element of contracts for construction. It clarified that changes in classification do not absolve the service from tax liability. The appellants' contention regarding non-taxability before a specific service introduction was deemed untenable. 5. The denial of 67% abatement due to free supplies not being included in the gross amount charged was deemed unsustainable based on a CESTAT Larger Bench judgment. The matter was remanded for re-adjudication, considering the appellants' eligibility for abatement under relevant notifications. The adjudicating authority was instructed to provide the appellants with a hearing opportunity during the re-evaluation process.
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