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2019 (9) TMI 463 - AT - Service TaxCommercial or Industrial Short payment of service tax - Construction Services - Work Contract Services - demand of differential service tax - case of appellant is that they have provided service alongwith material and have paid VAT thereon - HELD THAT - As it is a fact on record that the appellant is paying VAT on the works contract amount, in that circumstances, the appellant has rightly paid service tax @2% of the value of works contract. Thus, the appellant is not required to pay further service tax on their activity and whatever service tax has been paid by the appellant is the correct payment of service tax payable by the appellant. Demand do not sustain - appeal allowed - decided in favor of appellant.
Issues:
1. Differential service tax demanded from the appellant for construction services. 2. Whether the appellant correctly paid service tax on the works contract amount. 3. Validity of the impugned order confirming the demand of service tax, interest, and penalty. Analysis: 1. The appellant was registered under "Commercial or Industrial Construction Services" and "Work Contract Services." The audit revealed that a contract with a pharmaceutical company did not involve property transfer or levy of sales tax. The service provided was deemed under Commercial or Industrial Construction Service, subject to service tax on 33% of the gross value. The appellant paid service tax at 2% under "Work Contract Service," resulting in an alleged shortfall of ?2,65,074. A show cause notice was issued, leading to the confirmed demand and penalty imposition, contested by the appellant. 2. The appellant contended that VAT was paid on the works contract amount as construction included material supply. Providing VAT Challan as evidence, it was argued that the 2% service tax payment sufficed due to the VAT payment. The appellant's position was supported by the fact that service was provided along with material, justifying the service tax payment at 2%. 3. After hearing both parties, the Tribunal examined the VAT Challans and concluded that since VAT was paid on the works contract amount, the 2% service tax payment by the appellant was appropriate. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The Tribunal found no merit in the demand for additional service tax, affirming the correctness of the appellant's service tax payment based on the material supplied along with the service. This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the Tribunal's decision based on the evidence and legal provisions.
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