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TMI Blog2018 (10) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... es and which are not composite contracts - the demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007. The levy of service tax prior to 1.6.2007 cannot also sustain by application of the decision of the Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. Appeal allowed - decided in favor of appellant. - ST/94/2012, ST/40335/2013, ST/40336/2013, ST/40337/2013 - 42496-42499/2018 - Dated:- 26-9-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) For the Appellant : Shri G.Natarajan, Advocate For the Respondent : Shri R. Subramaniam, AC (AR) ORDER PER BENCH The issue involved in all these appeals being same, they are heard together and are disposed by this common order. 2. The appellants are aggrieved by the demand of service tax under construction of commercial or industrial construction service (residential complex service). 3. Brief facts are that during investigation, it was found that the appellant rendered construction of residential complex service in respect of M/s. Vij ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 The above demands of service tax stand confirmed on the appellant under construction of complex service, as defined under Section 65 (105) (zzzh) read with Section 65 (30a) and Section 65 (91a) of the Finance Act, 1994, in respect of certain residential apartment construction activities undertaken by the appellant. The demand has been made after granting abatement of 67 % from value, as the activities involve transfer of property in goods also. 4.2 At the outset, it is submitted that since transfer of property is also involved, the activities are liable to service tax only under works contract service, as per Section 65 (105)(zzzza) of the Act, from 01.06.2007 only and for this reason the demand upto 01.06.2007 is not sustainable. In this connection, reliance is placed on the decision of the Hon ble Supreme Court in CCE, Kerala v. Larsen Toubro Ltd reported in 2015 (39) STR 913 (SC), wherein it was held that the provisions of Section 65(105)(g), 65(105)(zzd), 65(105)(zzh), 65(105)(zzq) and 65(105)(zzzh) were not sufficient for levying service tax on indivisible composite works contract prior to 01.06.2007. The Hon ble Supreme Court has considered the whole scheme of taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.8 Accordingly it is prayed that the subject appeals may kindly be allowed by setting aside the impugned orders with consequential relief. 5. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. 6. After hearing both sides, it is brought to light that the period involved in the present case is from October 2004 to March 2009. The demand has been raised in the show cause notice under construction of residential complex services. The contracts entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service. The Tribunal in the case of Real Value Promoters Ltd. (supra) had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Complex Service and Construction of Residential Complex etc. are of special nature. He took support of the maxim generalia specialibus non derogant general things do not derogate special things . The counsel for appellants have submitted that as per Section 65A of the Act ibid, classification of service shall be based on the specific entries and the more specific description of service has to be preferred. He invited our attention to CBEC s Circular 128/10/2010 dated 24.8.2010 which is reproduced as under:- The matter has been examined. As regards the classification, with effect from 1-6-2007 when the new service Works Contract service was made effective, classification of aforesaid services would undergo a change in case of long term contracts even though part of the service was classified under the respective taxable service prior to 1-6-2007. This is because works contract describes the nature of the activity more specifically and, therefore, as per the provisions of Section 65A of the Finance Act, 1994, it would be the appropriate classification for the part of the service provided after that date. 7.12 Thus, for example, while construction of a new r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority has specifically held that all the 52 contracts which has been executed by the appellants are with material. Learned Counsel was correct in bringing to our notice that the said findings of the adjudicating authority that the appellant is eligible for abatement of 67% of the value of the goods is in itself the acceptance of the fact that the contracts were executed with material. It is also on record that the Revenue has not contested these findings of the adjudicating authority before the Tribunal. If that be so, even when the Revenue authorities are accepting the facts that the contracts executed by the appellant are nothing but works contracts, for the period in question, entire case of the Revenue in the show-cause notice stands demolished by the Apex Court in the case of Larsen Toubro Ltd. (supra). In the said judgment, their Lordships have very categorically laid down the law that the works contract cannot be vivisected for the confirmation of demand under various other services. On this ground itself, the entire demand confirmed by the adjudicating authority is liable to be set aside and we do so. c. In the case of URC Construction (P) Ltd. Vs. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady established in the aforesaid judgment of the Hon ble Supreme Court that the entry under Section 65(105)(zzd) is liable to be invoked only for construction simpliciter. Therefore, there is no scope for vivisection to isolate the service component of the contract. d. In the case of Logos Construction Pvt. Ltd. Vs. Commissioner of Central Excise as reported in 2018 (6) TMI 1361, the Tribunal has held as under:- 5.1 The payment upto 01.06.2007 will get extinguished on account of the law that has been laid down by the Apex Court in the case of Larsen Toubro Ltd., (supra), relied upon by the Ld. Counsel. So ordered. 5.2 The Ld. Counsel has been at pains to point out that on-going projects which were only in the nature of works contract prior to 01.04.2007 cannot be brought under different category of Construction Services and CICS subsequently. We find merit in his arguments. The SCN has proposed demand of service tax liability only under these two categories and not under Works Contract service. The demand confirmed in the impugned order under these categories namely under construction service for the period 10.09.2004 to 16.06.2005 under CICS for the period 16.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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