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2023 (10) TMI 62 - AT - Service TaxExtended period of limitation - works contract service or not - applicability of rule 2A of the Service Tax (Determination of Value) Rules 2006 - Suppression of facts or not - HELD THAT - There was a lot of ambiguity regarding the category of the services after the introduction of works contract service w.e.f. 01.06.2007 and it is only when the Supreme Court clarified the position in Larsen and Toubro 2015 (8) TMI 749 - SUPREME COURT that it was settled that indivisible contracts were liable to service tax under works contract w.e.f. 01.06.2007. Infact, disputes were subsequently also raised and the Supreme Court in Total Environment Building Systems 2022 (8) TMI 168 - SUPREME COURT affirmed the judgment of the Supreme Court in Larsen and Toubro and held the judgment did not require to be referred to a Larger Bench of the Supreme Court. In similar facts, the Tribunal in Incredible Unique Buildcon 2022 (7) TMI 1182 - CESTAT NEW DELHI held that the invocation of the extended period of limitation would not be justified. It is, therefore, not possible to sustain the invocation of the extended period of limitation from June 2007 upto September 2010 resorted to in the first show cause notice dated 23.10.2012 issued for the period January 2007 to March 2012. The appellant was clearing the pre-fabricated/pre-engineered steel buildings/structures and the parts thereof from its plants on payment of the excise duty as applicable and under the cover of the statutory prescribed invoices. This duty paid goods were cleared to the designated sites where erection, installation and commissioning were to be undertaken - the appellant has to pay service tax on the value of services as per rule 2A of the 2006 Rules and thereafter avail the CENVAT credit - On calculation of the demand under rule 2A of the 2006 Rules, the appellant would be entitled to refund of Rs. 28.72 crores which, the learned senior counsel for the appellant has stated, the appellant would not claim as refund. However, demand beyond extended period of limitation set aside. - Refund of the amount paid for the for the said period allowed. Appeal allowed.
Issues Involved
1. Classification of services under the Finance Act. 2. Invocation of the extended period of limitation. 3. Re-computation of service tax demands under Rule 2A of the 2006 Rules. Summary of the Judgment Classification of Services The appellant, M/s. Interarch Building Products Pvt. Ltd., was initially paying service tax under the category of 'commercial or industrial constructions' services. The department contended that the services should be classified as 'works contract' services under section 65(105)(zzzza) of the Finance Act. The Commissioner confirmed this classification and rejected the availability of CENVAT credit, leading to the appellant's appeal. Invocation of Extended Period of Limitation The Supreme Court remitted the matter to the Tribunal to decide on the extended period of limitation. The Tribunal examined Section 73(1) of the Finance Act, which allows for a one-year period for issuing a notice, extendable to five years in cases of fraud, collusion, or willful misstatement. The appellant argued that it had been regularly filing returns and that the department was aware of the facts due to regular audits. The Tribunal found that the department had conducted audits and did not raise any objections regarding the service classification, indicating no suppression of facts by the appellant. Therefore, the extended period of limitation for the period from January 2007 to September 2010 was deemed unsustainable. Re-computation of Service Tax Demands The Supreme Court directed the Tribunal to re-compute the service tax demands as per Rule 2A of the Service Tax (Determination of Value) Rules, 2006. The Tribunal noted that the appellant had paid excise duty on pre-fabricated buildings and that the service tax should be computed on the value of services as per Rule 2A. The appellant provided a Chartered Accountant's certificate indicating that if the demand for the period from June 2007 to September 2010 is time-barred, it would be entitled to a refund of Rs. 28.72 crores. However, the appellant stated it would not claim this refund. Conclusion 1. The extended period of limitation under the proviso to Section 73(1) of the Finance Act could not be invoked for the period from January 2007 to September 2010. 2. Even if Rule 2A of the 2006 Rules is applied for the period from October 2010 to March 2014, the appellant would be entitled to a refund of Rs. 28.72 crores, which it would not claim. The order dated 31.03.2017 passed by the Commissioner was set aside, and the appeal was allowed.
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