2024 (12) TMI 79 - AT - Service Tax

Demand under works contract service with interest and penalty - Inclusion of material value in works contract - Rule 2A(i) or Rule 2(A)(ii) of Service Tax (determination of value) Rules, 2006 - HELD THAT - The appellant is prayed that the prayer made in the appeal memo for setting aside the impugned order dated 24.05.2018 be deleted. What appears is that in view of the subsequent events resulting in passing of the order-in-original dated 19.03.2021, the appellant does not wish to pursue the present appeal and in fact the same has become infructuous. There are no merit in the submission of the appellant to add the aforesaid prayer in the appeal memo as the same is not maintainable. In so far as the benefit, if any, that has accrued in terms of the order-in-original dated 19.03.2021, the appellant is free to seek its implementation. The appellant had admitted their service tax liability in the remand proceedings, hence they are liable to pay interest under the provision of 75 of the Act. There are no infirmity in the order imposing penalty under various provisions of the Act. The appeal is accordingly, disposed of.

Summary

Issues:
Challenge to Order-in-Appeal confirming demand under works contract service; Inclusion of material value in works contract; Service tax liability computation method; Interest and penalty imposition; Modification of appeal prayer.

Analysis:
The appeal was filed challenging the Order-in-Appeal confirming demand under works contract service. The appellant, registered with the Service Tax Department, had an agreement with a company for a works contract. The appellant received material free of cost, not included in the works contract value. A show cause notice raised a demand of service tax, which was partially confirmed in the Order-in-Original. Separate appeals were filed, one rejected, and one decided based on a Supreme Court decision. The matter was remanded for proper value determination and adjudication.

During remand proceedings, the appellant admitted the service tax liability but contested the computation method. The adjudicating authority modified the liability based on the inclusion of material value and directions from the Commissioner (Appeals). The demand was reduced, and deposited amount adjusted. Interest and penalties were confirmed under relevant sections of the Act.

The appellant sought to modify the appeal prayer, which was deemed not maintainable. The appellant's admission of service tax liability led to interest payment under the Act. The penalty imposition was upheld. The appeal was disposed of accordingly, with no merit found in the appellant's submissions regarding prayer modification.