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TMI Blog2018 (11) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 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 in view of decision in the case of Larsen Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. Appeal allowed - decided in favor of appellant. - Appeal No. ST/607 And 608/2012 - Final Order Nos. 42500-42501/2018 - Dated:- 26-9-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri S. Muthuvenkataraman, Advocate for the Appellant Shri A. Cletus, ADC (AR) for the Respondent ORDER Per Bench The issue involved in both the appeals being the same they are heard together and are disposed by this common order. 2. On intelligence that appellants are not paying service tax on construction services provided by them, the Survey, Intelligence and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f relinquishment of their right over UDS inland. The appellant retained 58% of the constructed area and sold to individual buyers. The appellant discharged service tax on the land value collected at ₹ 300/- per sq. ft. for this 58% of the land which was sold to individual buyers. The case of the department is that appellants are to discharge service tax on the entire value of 58% on the basis of sale price of 42% of the flat sold to the individual buyers. He submitted that since the landowners have relinquished their right over 58% for which consideration was received from the individual flat buyers for the construction of flats of land owners, the appellants are not liable to pay service tax separately He further submitted that the contracts are composite in nature involving both service and labour. The period involved includes which is prior to 1.6.2007 and the decision rendered by the Hon ble Supreme Court in the case of Larsen Toubro Ltd. 2015 (39) STR 913 (SC) would apply to the period prior to 1.6.2007 and therefore the demand cannot sustain. With regard to the demand after 1.6.2007, he submitted that the demand raised in the show cause notice and in the adjudicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words contract . 7.10 The issue was analyzed by the Hon ble Apex Court in Larsen Toubro case (supra) and held that there can be no levy of service tax on composite contracts (involving both service and supply of goods) prior to 1.6.2007. This read together with the budget speech as above would lead to the strong conclusion that composite contracts 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (zzq) of the Finance Act, 1994. In such situation, we note that it cannot be a case of simple mentioning of wrong provisions of law as submitted by the Revenue. Apparently, the tax liability of composite works contract is to be considered under works contract services only as per legal position settled by the Hon'ble Apex Court in M/s L T Limited. Even in the 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 oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of properly in goods transferred in the execution of a works contract. 10. In view of this specific 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- a. The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service in the light of the Hon ble Supreme Court judgment in Larsen Toubro (supra) upto 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 compos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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