9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (12) TMI 276 - AT - Service TaxLevy of service tax - Works Contract Service - work under taken by the appellant is only of design, engineering, documentation, manufacture, supply of equipments and machinery and the supervision of erection and commissioning of such machinery - extended period of limitation. Whether the activity rendered by the appellant can be called as Works Contract Service? - HELD THAT - Apparently and admittedly contractor/TOSCOTEC, Italy had not only supplied the tissue plant equipment and machineries but also had agreed to supervise the entire procedure of erection, installation and commissioning of the said equipment and machinery. Not only this, they have also agreed to train the employees of the appellant for the upkeep and maintenance of the plant supplied by them. Hence, the activity of the appellant is an act for the purposes of carrying out erection, commissioning or installation of the tissue paper plant which is manufactured by TOSCOTEC, Italy and is supplied by TOSCOTEC itself to the appellant along with all such services of getting the same properly erected and installed and commissioned. In light of this observation, the mere fact that the erection, installation, commission and construction of civil structure for the purpose has got done from other Indian companies is irrelevant for the purpose. The act of supervising the erection, commissioning and installation is held to be an act for the purposes of carrying out erection, commissioning and installation. It is observed that the contract is a composite contract of supply and services as the price of goods has not been separately mentioned than the price of services. The contract price is the CISF price of goods at the rate of 69,50,000 Euros (Rs.44,79,27,500). This price is mentioned to have included the price of services, freight price, price of insurance from Italian port to mill site Amlai. Hence, it is clear that the contract in question is a composite contract for supply of goods and for rendering services. The services which are meant for the purpose of carrying out erection, commissioning and installation of the goods supplied. Hence, the activity rendered by TOSCOTEC, a company situated at place other than India, to the appellant in India is an activity of Works Contract Service. Resultantly, in terms of Section 66A of the Finance Act, 1994, appellant is liable to pay service tax under Reverse Charge Mechanism - issue stands decided in favour of department and against appellants. Whether the appellant is liable to pay service tax on the expenditure incurred for erection and commissioning of the plant by engaging various sub-contractors in terms of Rule 2A of Service Tax Valuation Rules? - HELD THAT - Since the contract between the appellant and TOSCOTEC is already held to be composite contract with no distinction in the price of goods and that of services, it is also held to be a Works Contract Service. Hence the charges paid by the appellant to various contractors as mentioned in Annexure A to the show cause notice are held includable in the gross value of the impugned contract between appellant and TOSCOTEC, Italy. Hence, there are no infirmity neither in the show cause notice nor in the order under challenge where the service tax liability upon the total value of contract including the cost paid to the contractors for erection, commissioning and that the liability of appellant is being included in the amount/value for rendering Works Contract Service - the adjudicating authority has failed to appreciate that appellant had already paid an amount of Rs.48,99,102/- on 17.12.2008 itself on account of Works Contract Services. This fact has been recorded in the show cause notice Para 4 thereof also. The adjudicating authority has also failed to take into consideration the service tax paid by the appellants vis- -vis invoices raised by the various contractors. The amount of service tax already paid by the appellant vis- -vis the activity in question should have been set off against the impugned demand. Hence we order the modification in computation of amount of liability. Extended period of limitation - HELD THAT - It is observed that the show cause notice itself has alleged that the appellant has failed to furnish the taxable value of Rs.2,49,15,31,31/- to the notice of the department and thus have concealed/suppressed the same with an intent to evade the payment of service tax amounting to Rs.3,07,95,328/-. The adjudicating authority also in Para 22 of the order under challenge has recorded that the liability of service tax came to the notice when they first made the payment to M/s. TOSCOTEC on 30.06.2008. For this, the ST-Return was required to be filed on 25.10.2008 but the appellant failed to discharge their liability during the appropriate period. The said act is rightly held to be a deliberate attempt for non-payment of service tax in contravention of provisions of Section 68 of Finance Act, 1994. Hence, it is held that proviso to Section 73 of Finance Act has rightly been invoked. Show cause notice cannot be held to be barred by time. The order under challenge is accordingly upheld - However, with the modification that the amount of service tax already paid be set off against the demand confirmed - the appeal is hereby order to be dismissed.
Issues Involved:
1. Whether the activity rendered by the appellant can be called as Works Contract Service? 2. Whether the appellant is liable to pay service tax on the expenditure incurred for erection and commissioning of the plant by engaging various sub-contractors in terms of Rule 2A of Service Tax Valuation Rules? 3. Whether the show cause notice is barred by limitation? Issue-wise Detailed Analysis: Issue No. 1: Works Contract Service The primary issue is whether the appellant's activities qualify as Works Contract Service under Section 65 (105) (zzzza) of the Finance Act, 1994. The definition includes contracts involving the transfer of property in goods and services such as erection, commissioning, or installation of plant and machinery. The Tribunal examined the contract between the appellant and TOSCOTEC, Italy, which involved the supply of equipment and supervision of erection, startup, and commissioning of a tissue paper plant. The contract was found to be composite, covering both supply and services without separate pricing for goods and services. The Tribunal concluded that the appellant's activities, which included supervising erection and commissioning, fell under Works Contract Service. Consequently, under Section 66A of the Finance Act, 1994, the appellant is liable to pay service tax under the Reverse Charge Mechanism. Issue No. 2: Liability Under Rule 2A of Service Tax Valuation Rules Rule 2A of the Valuation Rules specifies that the value of the service portion in a works contract includes various costs, such as labor charges and payments to sub-contractors. The Tribunal noted that the contract between the appellant and TOSCOTEC was composite, with no distinction between the price of goods and services. Therefore, the charges paid to various sub-contractors were includable in the gross value of the works contract. The Tribunal upheld the service tax liability on the total contract value, including costs paid to contractors for erection and commissioning. However, the Tribunal ordered a modification in the computation of liability, acknowledging that the appellant had already paid a portion of the service tax, which should be set off against the confirmed demand. Issue No. 3: Limitation The appellant contested the demand on the grounds of limitation, arguing that the show cause notice was issued beyond the statutory period. However, the Tribunal observed that the appellant had failed to disclose the taxable value, thereby concealing it with intent to evade tax. The adjudicating authority noted that the appellant's liability came to light when they first made a payment to TOSCOTEC, and the appellant failed to discharge their liability during the appropriate period. The Tribunal held that the proviso to Section 73 of the Finance Act, 1994, was rightly invoked due to the appellant's deliberate attempt at non-payment, and the show cause notice was not barred by time. Conclusion: The Tribunal upheld the order under challenge, confirming the service tax liability on the appellant's activities as Works Contract Service and including the costs paid to sub-contractors in the taxable value. The Tribunal dismissed the appeal but allowed for the set-off of service tax already paid by the appellant against the confirmed demand. The plea of limitation was rejected, as the extended period was rightly invoked due to suppression of facts by the appellant.
|
