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TMI Blog2018 (10) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... tegories 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. Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only - 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/42463/2015 - 42515/2018 - 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 K. Veerabhadra Reddy, ADC (AR) ORDER PER BENCH Brief facts are that during verification of accounts of the appellants by the Service Tax Commissionerate, Chennai it was noticed that the appellant did not pay service tax on the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g non-payment / short payment of service tax on the basis of various allegations, and demanding a total service tax of ₹ 6,81,44,297. It is alleged that the appellant has rendered commercial or industrial construction service to the landowners, in so far as the 50 % constructed area is being handed over to the landowners. The value of such taxable service has been arrived at on the basis of the amount charged by the appellant from the buyers of appellant s share of constructed area (total value minus guideline value of UDS portion of land sold to them). The demand has been made on the entire value, without allowing any abatement under notification 1/2006 ST, on the ground that the appellant has availed Cenvat credit on certain input services, while paying service tax in respect of the appellant s share of constructed area. Further, it is also alleged that the payment of service tax by the appellant, in respect of the sale of constructed area pertaining to the appellant, under the composition scheme of works contract service is not correct in as much the project commenced prior to the introduction of levy of service tax on works contract (01.06.2007) and hence service tax has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not at all sustainable and liable to be set aside. 2.5 As only pure service contracts are covered under the definition of CICS as held by the Hon ble Supreme Court, confirmation of the demand under the said service, post 01.06.2017, in respect of the composite contracts undertaken by the appellant is not at all sustainable. In this connection, he relied on the decision of the Tribunal in the case of Real Value Promoters Ltd. Vs. CCE 2018-TIOL-2867-CESTAT, Chennai. 2.6 Further, the appellant also relied on the decision of the Hon ble Tribunal in Vasantha Green Projects VS CCE 2018-TIOL-1611-CESTAT-Hyd wherein the demands in respect of services provided to landowners has been set aside on the ground that the entire amount received from buyers has been subjected to levy of service tax. In the instant case also, the entire amount received from the buyers has been subjected to the levy of service tax in the hands of the appellant, under WCS. He prayed that the impugned order may kindly be set aside and the appeal allowed. 3. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. 4. After hearing both sides, it is brought to light that the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were brought within the ambit of levy of service tax only with effect from 1.6.2007 by introduction of Section 65(105)(zzzza) i.e. Works Contract Services. As pointed out by the ld. counsels for appellants, there is no change in the definition of CICS/CCS/RCS after 1.6.2007. Therefore only those contracts which were service simpliciter (not involving supply of goods) would be subject to levy of service tax under CICS / CCS / RCS prior to 1.6.2007 and after. Our view is supported by the fact that the method / scheme for discharging service tax on the service portion of composite contract was introduced only in 2007. 7.11 The ld. AR Shri A. Cletus has tried to counter this contention by stating that works contract service is service / activity which would be of a general nature whereas the construction activities defined in Commercial or Industrial Construction Services, Construction 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, classificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, the Revenue submitted that the respondent were engaged in construction services liable to tax under tax entry Section 65(105) (xxq). The grievance of the Revenue is with reference to commercial nature of the construction undertaken by the respondent and not on the correct classification of taxable activity. b. In the case of Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai 2018-TIOL-360-CESTAT-MUM, in respect of identical issue for the period from 2005 to 2012, the Tribunal in para 7 has held as under:- 7. On careful consideration of the submissions made by both the sides, we find that the issue falls for consideration is whether the services rendered by the appellant in respect of 52 contracts entered with various Govt. authorities need to be taxed under MMRC/CICS/ECIS or otherwise. It is on record and undisputed that the adjudicating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific decision and the admitted claim of the appellant that they are not providers of commercial or industrial construction service but of works contract service , no tax is liable on construction contracts executed prior to 1st June, 2007. 11. Insofar as demand for subsequent period till 30th September, 2008 is concerned, it is seen that neither of the two show cause notices adduce to leviability of tax for rendering works contract service . On the contrary, the submission of the appellant that they had been providing works contract service had been rejected by the adjudicating authority. Therefore, even as the services rendered by them are taxable for the period from 1st June, 2007 to 30th September, 2008 the narrow confines of the show cause notices do not permit confirmation of demand of tax on any service other than commercial or industrial construction service . It is already 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1.6.2007 b. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service under Section 65(105)(zzzh) ibid, Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. c. For activities of construction of new building or civil structure or new residential complex etc. involving indivisible composite contract, such services will require to be exigible to service tax liabilities under Works Contract Service as defined under section 65(105)(zzzza) ibid. d. The show cause notices in all these cases prior to 1.6.2007 and subsequent to that date for the periods in dispute, proposing service tax liability on the impugned services involving composite works contract, under Commercial or Industrial Construction Service or Construction of Complex Service, cannot therefore sustain. In respect of any contract which is a composite contract, service tax cannot be demanded under CICS / CCS for the periods also after 1.6.2007 for the periods in dispute in these appeals. For this very reason, the proceedings in all these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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