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2022 (12) TMI 1142 - AT - Service TaxWork contract services - Determination of Value - Consideration - taxability of amount received on accrual basis - Commercial or Industrial Construction services/ Erection, Commissioning or Installation service - Works Contract service - Renting of Immovable Property service - Business Support services - demand of service tax alongwith interest and penalty - HELD THAT - From the impugned order, para 13.4, it is evident that Commissioner has concluded that the amount of Rs 60,00,000/- forfeited by the Appellant, is a consideration on the basis of the definition of term consideration as per Section 2 (d) of the Contract Act, 1962. However in the Finance Act, 1994, explanation to section 67, defines the term consideration . In our view the manner in which the term consideration has been defined by the Finance Act, 1994 is not in pari materia with the definition as contained in Contract Act. The impugned order which relies solely on the definition as contained in the Contract Act, for holding that this amount is consideration , for the services provided or to be provided cannot be upheld in view of the specific definition contained in Finance act, 1994. Commissioner needs to record a finding to the effect that this amount is an consideration as per the Finance Act, 1994 by referring to definition contained in therein. Appeal is partly allowed and the matter is remanded back to the original authority.
Issues Involved:
1. Service Tax on Commercial or Industrial Construction services. 2. Service Tax on Works Contract services. 3. Service Tax on Renting of Immovable Property services. 4. Service Tax on Business Support services. Detailed Analysis: 1. Service Tax on Commercial or Industrial Construction services: The demand for Service Tax amounting to Rs. 7,22,68,684/- for the period March 2006 to May 2007 was contested by the appellant. The appellant argued that these services, provided with the transfer of material, should be classified as Works Contract Services. The Supreme Court in the case of Larsen & Toubro Ltd. held that such services could not be taxed under the category of Commercial or Industrial Construction services before the introduction of Works Contract Services by the Finance Act, 2007. The tribunal accepted this argument and set aside the demand. 2. Service Tax on Works Contract services: For the period June 2007 to June 2010, the Commissioner confirmed a demand of Rs. 3,10,33,081/-. The appellant argued that the Service Tax should be calculated based on the actual receipts during the period, not on an accrual basis. The tribunal referred to the decisions in Tempest Advertising (P) Ltd. and Alpa Management Consultants Pvt. Ltd., which supported the appellant's view. The tribunal remanded the matter to the original authority for factual verification of the payments received and to ensure compliance with Rule 6 of the Service Tax Rules, 1994. 3. Service Tax on Renting of Immovable Property services: The demand of Rs. 13,78,709/- was based on the forfeiture of a security deposit of Rs. 60,00,000/-, which the Commissioner considered as consideration for the services to be provided. The tribunal noted that the definition of "consideration" under the Finance Act, 1994, differs from that in the Contract Act. The tribunal remanded the matter to the original authority to re-examine whether the forfeited amount qualifies as "consideration" under the Finance Act, 1994. 4. Service Tax on Business Support services: The demand of Rs. 14,24,939/- was confirmed without considering the appellant's submission that the monthly hire charges for furniture and fixtures should not be classified under Business Support services. The tribunal remanded this issue to the original authority for a fresh determination, considering the specific definition of "consideration" under the Finance Act, 1994. Conclusion: The tribunal set aside the demand for Commercial or Industrial Construction services and remanded the issues related to Works Contract services, Renting of Immovable Property services, and Business Support services to the original authority for re-examination. The original authority was directed to complete the remand proceedings within three months, providing an opportunity for a hearing to the appellant.
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