2018 (8) TMI 795 - AT - Service Tax

Contract related to development and maintenance of garden of GM Office, VTC, Executive hostel, Dispensary etc. - proviso to Sub-section (1) of Section 73 of Finance Act, 1994 - Held that - Small part of the confirmed demand pertains to the period from 14/10/2007 to 14/10/2008 and remaining confirmed demand is not sustainable for the reason that proviso to of Sub-section (1) of Section 73 of Finance Act, 1994 was not invoked. In respect of the demand related to contract dated 23/02/2006 for the period from 14/10/2007 to 14/10/2008, we remand the matter back to the Original Authority with direction to examine the admissibility of the appellant to the benefit of said Notification No.12/2003-ST. Appeal allowed by way of remand.

Summary

Issues:
1. Confirmation of demand under Section 73 of Finance Act, 1994 for contracts executed by the appellant.
2. Applicability of proviso to Sub-section (1) of Section 73 of Finance Act, 1994.
3. Eligibility for exemption under Notification No.12/2003-ST for contracts involving material.

Analysis:
1. The appeal was filed against Order-in-Appeal No.03/ST/ALLD/2012 passed by the Commissioner (Appeals), Central Excise, Allahabad, confirming a demand of &8377; 4,18,030/- against the appellant for seven contracts executed. The Original Authority upheld the demand and imposed a penalty under Section 78 of the Finance Act, 1994. The Commissioner (Appeals) also did not provide any relief, leading to the appellant approaching the Tribunal for redressal.

2. The appellant argued that the demand was confirmed for contracts executed between 06/12/2003 to 22/02/2008, with the show cause notice issued on 14/10/2008 without invoking the proviso to Sub-section (1) of Section 73 of the Finance Act, 1994. It was contended that the demand before 14/10/2007 was not sustainable. The demand for the period from 14/10/2007 to 14/10/2008 related to a specific contract dated 23/02/2006, involving development and maintenance services along with material. The appellant claimed eligibility for exemption under Notification No.12/2003-ST, which exempts material value from the assessable value.

3. After hearing both parties, the Tribunal found that only a small portion of the confirmed demand was applicable for the period from 14/10/2007 to 14/10/2008, with the remaining demand being unsustainable due to the non-invocation of the proviso to Sub-section (1) of Section 73. Regarding the contract dated 23/02/2006, the Tribunal remanded the matter to the Original Authority to assess the appellant's eligibility for the benefit of Notification No.12/2003-ST. The appellant was instructed to provide evidence supporting their claim before the Original Authority. Consequently, the Tribunal partially allowed the appeal through remand, setting aside the remaining part of the confirmed demand as unsustainable.

This judgment highlights the importance of procedural compliance and the need for a thorough examination of statutory provisions to determine the validity of demands raised under the Finance Act, 1994. It also underscores the significance of providing evidence to support claims for exemptions under relevant notifications.