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TMI Blog2018 (12) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... hama Projects in clause No 9 specifically indicates that sub-contractor is required to discharge sales tax and service tax on the completed works as applicable under the relevant Act. Subsequently, a certificate issued by M/s Sudhama Projects (now Poulomi) indicates that service tax liability on the entire contracted value has been discharged and enclosed the details of challan. The service tax liability on the contract executed by Sudhama Projects for the period post 01.06.2007 seems to have been discharged and the reference to challan No. and other payments are given in the statements annexed to the letter. Once the service tax liability due on the entire contract executed by sub-contractor is discharged, there is no reason for demand of any further service tax from the appellant - the service tax liability demanded from the appellant is liable to be set aside. Turn-over of the projects executed for APIICL, KTPS APSHCL and Software Engineer Employees Housing Association - Held that:- This issue needs to be addressed independently. Projects executed by the appellant for APSHCL and APIICL for the period 2010-11 - Held that:- From 01.06.2007, though works contracts are taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty imposed thereon. Appeal disposed off. - ST/30991/2016-DB - A/31588/2018 - Dated:- 21-12-2018 - Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical) Mr M.V.S. Sridhar Adv for the Appellant. Mr Pawan Kumar, A.R. for the Respondent. ORDER Per: M.V. Ravindran. This appeal is directed against order-in-original No. HYD-EXCUS-002-COM-044-15-16 dated 28.01.2016. 2. The relevant facts that arise for consideration are, the appellant herein were earlier known as M/s Ch. Marthanda Rao Co, were engaged in execution of infrastructure projects and were holding service tax registration certificate. During the course of audit of the accounts, it was noticed that they were engaged in construction of biotechnology park to Andhra Pradesh Industrial Infrastructure Corporation Ltd (herein after referred to as APIICL), high rise buildings for Dakshin Infrastructures Pvt ltd, construction of housing project for Andhra Pradesh State Housing Corporation Ltd (APSHCL) (Rajiv Gruh Kalpa) and for providing services of construction to M/s Aparna Infra Housing Pvt Ltd, M/s Software Engineers Employees Housing Welfare Association ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the contract entered into with M/s Sudhama Projects, they executed two projects aparna housing and Dakshin Infrastructure. He would draw our attention to the contract clauses and submit that in both the sub-contracts, the service tax liability was on the sub-contractors and sub-contractors have discharged the service tax liability under works contract services by availing composition scheme. He draws our attention to the copies of the agreements and the declarations from sub-contractors to submits that they have discharged the tax liability on the entire contract which was given on back-to-back basis to M/s Sudhama Projects India Pvt Ltd. As regards the demand of service tax for the amount of ₹ 12.93 crores, executed for APIICL, KTPS, APSHCL, and Software Engineer Employees Association, he submits that APIICL, APSHCL had awarded a tender to the appellants for construction of various houses under various projects, these contract were works contracts and are excluded from the service tax liability as these were not of commercial or industrial nature. He would draw our attention to the definition of works contract services under Section 65(105)(zzzza) of the Finance Act 1994 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as taxable which is incorrect, as cost of materials needs to be revised, which according to CA s certificate is 70% of the value of ₹ 46.07 lakhs. He would submit that in the case of Software Engineers Employees Housing and Welfare Association, the service tax liability needs to be reworked out assuming that on merits the matter is against them. As regards the service tax liability on the transportation of goods by road, it is the submission that the activity shall not amount to GTA services as they had only transported the goods within the project site. As per the requirement of the activity; materials required for the projects were in a storage place within the site and transported from that place to the place of work for which they had engaged services of various transport and paid them the amount which has been indicated in the balance-sheet as freight charges. It is the submission that this would fall under GTA services. He would rely upon the decision of the Tribunal in the case of Noida Power Company Ltd Vs CCE Noida [2014(33)STR 383 (Tri-Del)] in respect of tax liability on the KTPS and in the case of Kedar Constructions Vs CCE Kolhapur [2015(37) STR 631 (Tri-Mum)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarge of service tax liability by M/s Sudhama Projects India Pvt Ltd on back-to-back contracts nor there is any evidence produced regarding the claim of the appellant that 70% of the total value of material cost is various works contracts executed. He would submit that the claim of the appellant s counsel that APSHCL and APIICL are Govt of Andhra Pradesh undertakings and that they were under bonafide belief that services rendered to these organisations are exempted, is not borne out of any evidences; he would submit that nothing prevented the appellants from seeking a clarification. It is his submission that the C.A s certificates etc. which are relied upon were not produced before the lower authorities. 6. In rejoinder, the learned counsel draws our attention to the adjudicating authority s order and submits that they had given detailed C.A s certificate as also various explanations which have been recorded in the submissions made by them; they submitted a certificate from the Chartered Accountant on these items and is recorded in the adjudicating authority s order and draws our attention to the same. 7. We have considered the submissions made by both sides and perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pvt Ltd [which subsequently became Poulomi Infra Pvt Ltd]. The said sub-contract entered into by the appellant with M/s Sudhama Projects in clause No 9 specifically indicates that sub-contractor is required to discharge sales tax and service tax on the completed works as applicable under the relevant Act. Subsequently, a certificate issued by M/s Sudhama Projects (now Poulomi) indicates that service tax liability on the entire contracted value has been discharged and enclosed the details of challan. The service tax liability on the contract executed by Sudhama Projects for the period post 01.06.2007 seems to have been discharged and the reference to challan No. and other payments are given in the statements annexed to the letter. It is to be noted that there is no allegation in the show-cause notice that appellant had marked up value of the contracts, which has been sub-contracted by them to M/s Sudhama Projects. In the absence of any such allegations, the certificate issued by M/s Sudhama Projects clearly indicates that they have paid the service tax liability under works contract under composition scheme for the projects executed by them for the appellant, in our view once the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or b. construction of a new building or a civil structure or a part thereof , or of a pipeline or conduit, primarily for the purposes of commerce or industry; or c. construction of a new residential complex or a part thereof; or d. completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or e. turnkey projects including engineering, procurement and construction or commissioning (EPC) projects, (Section 65 (105) (zzzza)). It can be seen from the above reproduced definition of works contract that under Section 105(zzzza), works contracts are liable to tax if they are covered under clause (i) and (ii). In the case in hand, the contracts executed by the appellants with APSHCL and APIICL are works contract, an undisputed fact. The said con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossible of the several clauses under Explanation (ii) of Section 65(105)(zzzza), a distinct taxable service defined with constituent elements thereof substantially drawn from elements of pre-existing taxable services like ECIS, CICS or COCS; and other services when bundled to amount to turnkey/EPC; (Emphasis supplied) It can be seen from the above reproduced conclusion that from 01.06.2007, though works contracts are taxable, they would not be excisable if the services thereby is primarily for non-commercial, non-industrial purposes. In the case in hand, we have already recorded that there is no allegation nor there is any finding as to the commercial nature of the buildings or the civil structure, constructed by the appellant for APSHCL and APIICL. Thus, on this ground, the demands raised on the appellant needs to be set aside. As regards limitation, we find that appellant approached APIICL on the service tax issue and the letter written by APIICL indicates that appellants were informed that they being State Govt entity are not required to service tax liability. In our view appellant could have entertained a bonafide impression that once State Govt entity indicates/informs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity of the appellant therein of construction of sub-station and also for maintenance of sub-station. The Bench was seized as to whether the service tax liability under commercial and industrial construction services would be exempted under Notification No. 45/2010 or otherwise and in Paragraph No 5 6, held as under: 5. We notice that out of the total demand confirmed of ₹ 2,04,14,368/-, bulk of the demand of ₹ 1,90,47,124/- pertains to Commercial or Industrial Construction service rendered to Maharashtra State Electricity Transmission Co. Ltd., Maharashtra State Electricity Distribution Co. Ltd., Sunil Hi-Tech, Suraj Constructions, V.B. Bhike, etc. for transmission of electricity. Vide Notification 45/2010-S.T., all taxable services rendered in relation to transmission and distribution of electricity have been exempted from the purview of Service Tax. The expression relating to is very wide in its amplitude and scope as held by the Hon ble Apex Court in Doypack Systems P. Ltd. - 1988 (36) E.L.T. 201 (S.C.). Therefore, all taxable services rendered in relation to transmission/distribution of electricity would be eligible for the benefit of exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely accomplished without installation of sub-stations, transmission towers and installation of meters to record electricity consumption for periodic billing and recovery of charges. On holistic reading of the ratio of the Tribunal, it is clear that any activity in relation to transmission and distribution of electric energy and any services provided in relation to such activity is exempt from service tax. It is nobody s case that KTPS is not producer of thermal electrical energy and electricity being an item that cannot be stored requires immediate transmission and distribution. In our view this activity of rendering service to KTPS would be covered by retrospective Notification No 45/2010 dated 20/07/2010. In view of this, we hold that service tax liability fastened upon the appellant for the services rendered to KTPS is also unsustainable and liable to be set aside and we do so. B.3 As regards the service tax liability on the services rendered to Software Engineers Employees Housing and Welfare Association, wherein the turnover of 46.07 lakhs is involved we find that there is nothing on record to show that the said Software Engineers Employees Housing and Welfare Associati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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