2019 (6) TMI 212 - AT - Service Tax

Benefit of N/N. 15/2004 dated 10.09.2004 and N/N. 01.2006 dated 01.03.2006 - benefit denied on the ground that the appellant has not included the value of the pipe supplied by service recipient - HELD THAT - From the computation chart of the demand, we find that for the demand shown in Annexure A to SCN, the total value was taken from the balance sheet after excluding the value of coating, from this it is not revealed that whether the value of pipe was included in the gross taxable value or otherwise. It is obvious that once the pipe is supplied by the recipient of the service, the value of the said pipe will not reflect in the balance sheet, therefore, there appears to be some error in computation of duty, therefore, the same needs to be reexamined - matter on remand. Demand of service tax - coating work of pipe carried out on the pipe supplied by the service recipient - sub-contract - time limitation - HELD THAT - The authority below denied the benefit of sub-contractor only on the ground that during the relevant time, the cenvat scheme was operated, accordingly, the appellant was entitled to avail the cenvat credit and discharge the service tax. However, whether the circular is applicable and consequently whether the demand is hit by limitation or otherwise has not been dealt with properly by the lower authority, therefore, this issue also needs to be reconsidered - matter on remand. Appeal allowed by way of remand.

Summary

Issues:
1. Demand of ?41,34,004/- due to denial of benefit of Notification No. 15/2004 and Notification No. 01.2006 on the ground of not including the value of the pipe supplied by the service recipient.
2. Demand of ?6,77,862/- towards the coating work of pipe carried out on the pipe supplied by the service recipient.

Analysis:

Issue 1:
The appellant contended that they are entitled to the benefit of Notification No. 15/2004 and Notification No. 01.2006 based on a Supreme Court judgment in the case of Bhayna Builders. The Tribunal agreed with the appellant, stating that even if the material supplied by the service recipient is not included in the gross value of service, the benefit of the notifications cannot be denied. However, the Tribunal found an error in the computation of duty as the value of the pipe supplied by the recipient would not reflect in the balance sheet. Therefore, the Tribunal remanded the issue for reexamination.

Issue 2:
Regarding the demand for coating work of the pipe, the appellant argued that they were a sub-contractor and not liable to pay service tax based on a Circular of the Board. The Tribunal noted that the demand was hit by limitation due to the appellant's belief that they were not liable for service tax as a sub-contractor. The lower authority had denied the benefit of being a sub-contractor based on the operation of the cenvat scheme at the relevant time. The Tribunal held that this issue needed further consideration in light of the Board Circular. Consequently, the Tribunal set aside the impugned order and remanded the case for fresh consideration by the adjudicating authority.

In conclusion, the Tribunal allowed the appeal by way of remand for both issues, directing the adjudicating authority to pass a fresh order after reexamining the issues highlighted in the judgment.