2019 (3) TMI 247 - AT - Service Tax

Valuation - Works contract services - inclusion of value of goods supplied either under a different contract or as a separate part of the same contract in the value of taxable services on which service tax on works contract service is to be charged - Held that - On an identical issue in respect of the same assessee in TATA PROJECTS LIMITED VERSUS CST, HYDERABAD ST 2019 (2) TMI 1037 - CESTAT HYDERABAD , after examining the amendment to works contract (composition scheme for payment of Service Tax) Rules, 2007 vide notification No. 23/2009-ST, dt. 07.07.2009 and the explanation of the amendment by CBEC vide D.O.F. No. 334/13/2009-TRU, dated 06.07.2009 has held that appellant is not liable to include the value of the goods as the contracts were signed/payments were made prior to 07.07.2009. No service tax is payable - the demands as confirmed by the impugned order are liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Works Contract Services rules pre and post-amendment regarding the inclusion of goods value in taxable services.

Analysis:
The appeal was filed against an Order-in-Original related to the Works Contract Services rules. The appellant was registered under the composition scheme for Service Tax payment. The amendment on 07.07.2009 required the gross value of works contract to include the value of all goods used, whether received free or for consideration. The purpose was to prevent underreporting of goods value for tax calculation. The appellant argued that for projects initiated before 07.07.2009, goods value need not be included in taxable services. A previous judgment supported this argument. The Department contended that goods value was not included in the contracts, leading to demands, interest, and penalties. The Tribunal examined the rules and the CBEC explanation, reiterating the appellant's non-liability for goods value inclusion pre-amendment. The Tribunal upheld the appellant's stance for 13 projects initiated before the amendment. For the 14th project post-amendment, the differential tax was negative, absolving the appellant from service tax liability. Consequently, the demands, interest, and penalties were set aside, and the appeal was allowed.