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2024 (1) TMI 334 - AT - Service TaxLevy of of service tax - Composite works contracts involving rendering the service - transfer or a deemed transfer of property in the material used in executing the works contracts - period 2005-06 to 2010-11 - HELD THAT - The entire demand confirmed was under the heads Commercial or Industrial Construction Service , Construction of complex service or Management, maintenance and repair service. The charge under these headings applies only to services simplicitor and not to composite works contract services as per M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 2015 (10) TMI 612 - SUPREME COURT . Therefore, the entire demand in the impugned order in this Appeal and interest and consequently all penalties need to be set aside. Levy of service tax - Management, Maintenance and repair service - Commercial or industrial Construction Service/Works contract service - period 2011-12 - HELD THAT - For the period from 1.6.2007 up to 2012, works contracts could be taxed only if they fell under clause 65 (105)(zzzza) and only under this clause. The scope of this clause was limited and it did not include all composite works contracts involving supply or deemed supply of goods and rendering services but only some such services. Insofar as the construction of a building or structure is concerned, this clause applies to findings for commercial purposes - Even if the reasoning of the Commissioner, that it can also be used for commercial purposes is accepted, the essential nature of the building is not commercial. Therefore, it does not fall under section 65(105)(zzzza). The charging section of a tax statute must be strictly constructed and in case of any doubt, the benefit of doubt must go in favour of the assessee and against the Revenue. MDU is a university created by an Act of state legislature and is meant to provide education. Hence, we find that the service of construction of the auditorium in MDU is exempted during after 2012 also - the demand of service tax on this contract deserves to be set aside. Abatement towards cost of material - the demand of service tax on this contract deserves to be set aside - HELD THAT - It is undisputed that the work was done in connection with the Central Government quarters which were outsourced by the Ministry of Housing and Urban Affairs to National Building Construction Corporation (NBCC) who, in turn, sub-contracted them to the appellant. Since the civil structure and other works in this case were clearly not meant for commerce or industry but to provide accommodation to the Central Government employees and were rendered to the Ministry of Housing and Urban Affairs, they would be clearly exempted by S.No. 12A (a) of the notification at the hands of the NBCC. The appellant, as a sub-contractor of NBCC will also be exempt by virtue of S.No. 29(h) of the notification. The demand under this contract cannot be sustained and hence needs to be set aside. Construction of Flatted Factories at Sonepat for HSIIDC - Period 2012 13 to 2013 14 - HELD THAT - Since the dispute is only regarding the certificate that HSIIDC had paid the service tax, this a fit case to be remanded to the Commissioner to examine the certificates produced by the appellant. SCN to EIL (Renovation of Ayakar Bhawan Vaishali, Ghaziabad) - this contract was given by the Income Tax Department to Engineers India Ltd. who, in turn, sub contracted the work to the appellant - HELD THAT - N/N. 25/2012-ST (S.No. 12A) exempts services rendered to a governmental authority on civil structures other than those meant for commerce, industry or any other business or profession. The building in this case is Income Tax building and it squarely falls under this definition. Therefore, EIL, as a contractor, will get exemption under S. No. 12A. Further, as per S.No. 29 (h) of the same notification, the appellant as a sub-contractor of EIL will get exempted. Therefore, no demand of service tax can be sustained on the services rendered in this contract. Construction of an auditorium in the Kalpana Chawla Government Medical College, Karnal on a contract received from HSCC India Ltd. - case of the appellant is that this construction is covered by notification no. 30/2012 issued under section 68 of the Finance Act according to which only 50% of the Service tax has to be paid by the service provider and the remaining 50% has to be provided by the service recipient - HELD THAT - In the present case, by virtue of the service being rendered by the Appellant, they were liable to pay service tax in terms of provisions of Section 68. However, he did not record any findings on the question if the appellant s case was covered by notification no. 30/2012-ST and hence only 50% service tax has to be paid or if it is not covered, why - thus this matter also must be remanded to the Commissioner to examine and decide. Thus, the demands on the contracts for services rendered as sub-contractor to NBCC at Kidwai Nagar and in NOIDA SEZ are liable to be dropped. The demand regarding the contract with HSCC India must be remanded to the Commissioner to examine and record a finding on the claim of the appellant that it was covered by notification no. 30/2012-ST and hence was liable to pay only 50% of the service tax which it had already paid. Appeal disposed off.
Issues Involved:
1. Non-payment of service tax on "construction services". 2. Classification of services under various clauses of section 65(105) of the Finance Act, 1994. 3. Applicability of abatement and exemptions under relevant notifications. 4. Validity of demands and penalties imposed by the Commissioner. Summary: Issue 1: Non-payment of service tax on "construction services" The appellant was providing 'Construction Services' and was alleged to have not paid service tax on certain services. The Department initiated investigations and issued several Show Cause Notices (SCNs) covering different periods. The demands proposed in these SCNs were confirmed by various Orders-in-Original (O-I-O). Issue 2: Classification of services under various clauses of section 65(105) of the Finance Act, 1994 The contracts involved were composite works contracts involving both services and transfer of property in materials. The Supreme Court in Commissioner vs Larsen & Toubro held that composite works contracts were not taxable under service tax prior to 1.6.2007. Therefore, demands for periods before this date were set aside. For periods from 1.6.2007 to 1.7.2012, if the SCNs did not demand service tax under section 65(105)(zzzza), the demands could not be sustained. Issue 3: Applicability of abatement and exemptions under relevant notifications For post-2012 periods, the services were examined under the negative list and relevant exemptions. The Tribunal found that services provided to educational institutions and certain government projects were exempt under notifications such as 25/2012-ST and 30/2012-ST. Specific contracts like the construction of an auditorium at Maharishi Dayanand University, Rohtak, and works for NBCC and HSIIDC were found to be exempt or eligible for abatement. Issue 4: Validity of demands and penalties imposed by the Commissioner The Tribunal set aside several demands and penalties where the services were wrongly classified or where exemptions were applicable. For some contracts, the matters were remanded to the Commissioner for re-examination, especially where the appellant provided certificates showing that service tax was paid by the service recipient. Detailed Judgment: Service Tax Appeal No. 50097 of 2022 The demand for the period 2005-06 to 2010-11 was set aside as the services were classified under heads that did not apply to composite works contracts. Service Tax Appeal No. 52211 of 2016 - SCN 23.10.2012 (2011-12): Remanded for re-calculation after abatement for materials used in works contracts. - SCN 21.05.2014 (2012-13): Remanded to examine certificates from HSIIDC showing service tax payment. - SCN 17.04.2015 (2013-14): Similar remand for verification of HSIIDC certificates. - All penalties were set aside invoking section 80 of the Finance Act. Service Tax Appeal No. 52133 of 2022 - Demands on contracts with NBCC at Kidwai Nagar and NOIDA SEZ were set aside. - The contract with HSCC India Ltd. was remanded to verify the appellant's claim under notification 30/2012-ST. Service Tax Appeal No. 52134 of 2022 The demands on contracts with NBCC Rohtak and Engineers India Ltd. were set aside. Service Tax Appeal No. 52135 of 2022 - Demands on contracts with NBCC at Kidwai Nagar, NOIDA SEZ, and HSCC India Ltd. were addressed similarly to Appeal No. 52133. - The demand based on amounts received from CPWD and Form 26AS was set aside as the department did not prove these were for taxable services. Conclusion: The appeals were disposed of with several demands and penalties set aside. Matters requiring further verification were remanded to the Commissioner. The appellant was entitled to consequential relief.
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