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2018 (12) TMI 15 - AT - Service TaxWorks contract service or not - contracts were for supply of goods and services and the execution of the said contracts were prior to 01.06.2007 - Held that - The ratio of the Apex Court judgment in the case of CCE vs. L&T Limited 2015 (8) TMI 749 - SUPREME COURT would directly apply as there is no dispute that the contracts which were entered into by the appellant were for supply of goods and services in execution of the contracts, where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - demand set aside. Valuation - includibility - inclusion of cost of free supplies in assessable value - period involved in this case is prior to 01.06.2007 - Held that - The issue now settled in the case of CST vs. Bhayana Builders (P) Ltd. 2018 (2) TMI 1325 - SUPREME COURT OF INDIA , where it was held that The value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005 - demand set aside. Appeal allowed - decided in favor of appellant.
Issues:
Service tax liability under Construction of Industrial Complex Services (CICS) - Exemption under notification No. 15/2004-ST - Inclusion of value of goods supplied under supply contracts. Analysis: The appellant entered into various contracts with Hy-Grade Pellets Limited for construction activities and supply of materials. The service tax liability under Construction of Industrial Complex Services (CICS) was discharged by claiming exemption under notification No. 15/2004-ST. The issue arose when the appellant did not include the value of the materials supplied under the separate supply contracts. Show cause notices were issued alleging ineligible benefit under the notification. The adjudicating authority confirmed the demands, citing non-inclusion of goods' value and suppression of facts to evade tax, imposing penalties. The appellant contested the notices, arguing that the services provided were Works Contract Services (WCS) covered by the contracts. The appellant's counsel contended that the contracts were for supply of goods and services, falling under Works Contract Services, citing relevant case laws including the judgment of the Apex Court in CCE vs. L&T Limited. The counsel also referenced the judgment in CST vs. Bhayana Builders (P) Ltd. to support the inclusion of the value of free supplies in taxable services. The Departmental Representative (DR) maintained that the contracts were individual for supply and services, supporting the adjudicating authority's view. Upon review, the Tribunal found that the contracts involved both supply of materials and services, and the period in question was before 01.06.2007. Citing the settled law as per the judgments of the Apex Court in L&T Limited and Bhayana Builders (P) Ltd., the Tribunal concluded that the impugned order was unsustainable. As the issues were no longer res-integra, the Tribunal set aside the impugned order, allowing the appeal. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the order confirming the demands and penalties. The judgment emphasized the applicability of Works Contract Services, the inclusion of goods' value in taxable services, and the settled legal position established by the Apex Court's judgments.
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