9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (10) TMI 319 - AT - Service TaxClassification of services - Work Contract Service - Construction of Commercial Complex - claim for abatement for determination of the taxable value as per Rule 2A of Service Tax (Determination of Value) Rules, 2006 - denial on the ground that the appellant have failed to substantiate their claim to abatement - Recovery of interest with penalty - extended period of limitation - HELD THAT - It is evident that the Commissioner has accepted the plea taken by the Appellant that the services provided by them do not merit classification under the category of Construction of Commercial Complex as defined by the Section 65 (25b) of the Finance Act, 1994, but would merit classification under the category of Work Contract Service as defined by Section 65 (105) (zzzza) of the Finance Act, 1994. Admittedly the contract in the present case involves transfer of property involved in execution of work contract, and the contract is not an service contract simplicitor. There is no dispute about the fact that the services in dispute are correctly classifiable for the period upto 01.07.2012 under the category of work contract services and should have been subjected to service tax under the category of work contract services after allowing the abatement as provided for - the revenue has not made any demand of service tax claiming the classification of the services under this category. Since show cause notice is the foundation for making the demand and same cannot be amended at later date at time of adjudication or appeal the demand made for the period upto 01.07.2012 cannot be sustained. For the period from 01.07.2012, the issue of classification of service under the taxable category had be done away with and the demand was to be made in respect of the services that are covered by the definition of service as per Section 65 B (44) of the Finance Act, 1994 and not specified in the negative list of services. Admittedly appellant also do not deny the same and have claimed that the services provided by them are exempt from payment of service tax under Serial No 13 (a) of the Exemption Notification No 25/2012-ST - Appellants have claimed that the work undertaken by them falls within the exclusive category of tunnel. However on examination of the contract Commissioner has in para 4.10 of the impugned order, found that the work undertaken by the appellants is not in relation to tunnel. The contract specifically does not provide that work undertaken falls in relation to any tunnel. It is settled principle of law that exemption notifications need to construed strictly and any ambiguity in the same needs to be resolved in the favour of the revenue. The benefit of abatement shall be available only if the Appellant are able to substantiate that they have not taken any CENVAT credit of the inputs used in or in relation to the said work contract. Commissioner order denying the benefit of abatement cannot be faulted to this extent. However in interest of justice in our view for the period for which are upholding the demand appellant should be given one more opportunity to substantiate their claim to abatement. For this purpose the matter needs to be remanded back to the original authority. Extended period of limitation to make the demand under proviso to Section 73 (1) - HELD THAT - Non-payment of Service Tax was brought to the notice by the Commissionerate of Service Tax, New Delhi when inquiry was initiated. Noticee was under legal obligation to discharge the Service Tax liability. The Show Cause Notice is a result of investigation carried out by the Department. Therefore, there is case of suppression of material facts and contravention of various provisions of law willfully with intent to evade payment of Service Tax, warranting the demand of Service Tax for the extended period. Demand of interest - HELD THAT - The interest liability accrues automatically from confirmation of demand as recoverable - there are no infirmity in the demand of interest as per the impugned order in respect of the amount of service tax that is required to be paid. Penalty - HELD THAT - Since the demand made by invoking the extended period of limitation by holding the case to be clear case of suppression of facts and contravention of provisions of law leading to evasion of service tax penalty under section 78 needs to be set aside in view of the decision of Hon ble Apex Court in case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. 2009 (5) TMI 15 - SUPREME COURT . In view of various decisions holding that that the penalty under Section 76 and 77 are civil liabilities and do not require the existence of mens rea the penalties imposed under Section 76 and 77 are upheld. The appeal is partially allowed.
Issues Involved:
1. Classification of services under "Commercial or Industrial Construction Service" versus "Works Contract Service." 2. Applicability of Service Tax on the services provided. 3. Eligibility for exemption under Notification No. 25/2012-ST. 4. Invocation of extended period of limitation. 5. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. 6. Demand for interest under Section 75 of the Finance Act, 1994. 7. Eligibility for abatement under Rule 2A of Service Tax (Determination of Value) Rules, 2006. Detailed Analysis: 1. Classification of Services: The Principal Commissioner initially classified the services provided by the appellant under "Commercial or Industrial Construction Service" as defined under Section 65(105)(zzq) read with Section 65(25b) of the Finance Act, 1994. However, the Commissioner later accepted that the services should be classified under "Works Contract Service" as defined under Section 65(105)(zzzza) of the Finance Act, 1994. The contract involved transfer of property in goods, making it a composite works contract rather than a service contract simpliciter. 2. Applicability of Service Tax: For the period up to 01.07.2012, the services were correctly classifiable under "Works Contract Service" and should have been subjected to service tax under this category after allowing abatement. However, since the show cause notice (SCN) classified the services under "Commercial or Industrial Construction Service," the demand for this period cannot be sustained. For the period post-01.07.2012, all services are taxable except those specified in the negative list. The appellant's claim for exemption under Notification No. 25/2012-ST was examined. 3. Eligibility for Exemption: The appellant claimed exemption under Serial No. 13(a) of Notification No. 25/2012-ST, arguing that the work undertaken was related to the construction of a tunnel. However, the Commissioner found that the work did not pertain to a tunnel but was related to civil, structural, and finishing works for a service corridor. The contract did not specify the construction of a tunnel, and the benefit of exemption could not be granted. 4. Invocation of Extended Period of Limitation: The Commissioner invoked the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, citing suppression of facts and willful misstatement by the appellant. However, since the demand for the period up to 01.07.2012 was set aside on merits, the issue of limitation became irrelevant for this period. The other two SCNs were issued within the normal period of limitation. 5. Imposition of Penalties: The Commissioner imposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994. Since the demand for the period up to 01.07.2012 was set aside, the penalty under Section 78 was also set aside. Penalties under Sections 76 and 77 were upheld as they are civil liabilities and do not require the existence of mens rea. 6. Demand for Interest: The demand for interest under Section 75 of the Finance Act, 1994, was upheld. The interest liability accrues automatically from the confirmation of the demand as recoverable. 7. Eligibility for Abatement: The appellant claimed abatement under Rule 2A of Service Tax (Determination of Value) Rules, 2006. The Commissioner denied the abatement due to the appellant's failure to substantiate the claim. The benefit of abatement is available only if the appellant has not taken CENVAT credit on inputs used in the works contract. The matter was remanded back to the original authority to allow the appellant to substantiate their claim for abatement. Conclusion: - The demand for the period up to 01.07.2012 was set aside. - For the period post-01.07.2012, the matter was remanded back to the original authority for redetermination of the service tax payable after considering the claim of abatement. - The demand for interest was upheld. - Penalties under Sections 76 and 77 were upheld, while the penalty under Section 78 was set aside. - The original authority was directed to re-determine the issues within three months of receipt of the order.
|
