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TMI Blog2018 (10) TMI 1645X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide services under the category of Construction of Residential Complex Services, they failed to pay for the period from Jun. '05 to Jan.'10. Show-cause notice was issued proposing to demand service tax under Construction of Residential Complex Services. After due process of law, the original authority confirmed the demand, interest and penalties. Hence this appeal. 2. On behalf of the appellants, the learned counsel Shri M.N. Bharathi submitted that the show-cause notices have been issued in respect of their produce - 'Neoheritage', 'Metropolis', 'Garden' and 'Sakthi Gardens Phase II'. The activities undertaken by the appellants were involving composite contracts, wherein, both supply of materials as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made under Construction of Complex Service. The Tribunal in the case of M/s. Real Value Promoters Pvt Ltd, (supra) had discussed in detail the leviability of service tax on composite contracts under the category of CCS/CICS/ECIS for the period after 01.06.2007. The Tribunal therein had observed that after 01.06.2007, the demand for such composite contracts can attract the levy of service tax under the category of Works Contract Services only. The relevant portion of the order is reproduced as under:- "There was considerable litigation on the issue whether service tax can be levied on indivisible works contract prior to its introduction from 1.6.2007 which was finally settled by the Hon'ble Apex Court in the case of Commissioner of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the construction activities are in the nature of composite works contract. The appellants being involved in the construction of the same projects prior to and after 1.6.2007, for example, even in the show cause notice dated 20.10.2009 (relating to Appeal No. ST/723/2010), taxable value has been calculated at 33% of gross amount received which is an implicit admission that that activity involved both material supply as well as value services. Another ground for demand is that the appellants have not exercised their option for payment of service tax under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. In any case, the show cause notices implicitly agree that the work performed by the appellant is in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial or industrial construction service, construction of complex service and in addition turnkey projects including EPC projects within the definition of Works Contract Service. At this juncture, it is worthwhile to reproduce excerpts from the Union Finance Minister's budget speech in 2007:- "State Governments levy a tax on the transfer of property in goods involved in the execution of a works contract. The value of services in a works contract should attract service tax. Hence, I propose to an optional composition scheme under which service tax will be levied at only 2 per cent of the total value of the words contract". The issue was analyzed by the Hon'ble Apex Court in Larsen & Toubro case (supra) and held that there can be no levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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." Thus, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible 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 appeals cannot sustain." 7. Following the ratio laid in the above decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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