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TMI Blog2019 (3) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... otal value of taxable services arrived at by the department, upto 2008, taking into account the amount of Rs. 25,32,369/- paid by the appellant it appeared that service tax liability on this score for the period March 2007 to Jan 2008 worked out to Rs. 2,49,31,259/- (3) Non-inclusion of value of materials supplied free of cost, for arriving at correct taxable value in respect of certain plant resulting in apparent short service tax payment of Rs. 45,28,653/- . Accordingly, a show cause notice dt. 29.08.2008 was issued to the appellants inter alia, proposing demand of the aforesaid apparent service tax liabilities with interest thereon, appropriation of amounts paid by them and imposition of penalties under various provisions of law. In adjudication, vide an order No.17/2010 dt. 12.10.2010, the Commissioner confirmed the demand as proposed in the SCN and imposed penalties under Section 78 of the Finance Act, 1994. Hence Appeal ST/27/2011. 2.2 Appellants filed refund claim of Rs. 23,74,026/- on 22.07.2008 on the ground that the tax discharged related to services provided to enable L & T to construct On-shore Terminal which falls under the ambit of exclusion clause contained in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that activity is taxable under the heading CICS and does not fall under the exclusion of being OT Terminal then tax only on 33% value of services rendered alone would be payable in terms of Notification No.1/2006-ST. However, Ld. Advocate points out that appeal against the Tribunal decision in Afcons has been admitted by the High Court of Mumbai as reported in 2016 (44) STR J209 (Bom.). Ld. Advocate prays that on the same lines the present dispute may also be remanded to the adjudicating authority with similar directions. (b) Issue II. Penalty of Rs. 2,49,31,259/- imposed by the adjudicating authority Ld. Advocate submits that they were under the bonafide impression that all through on-shore terminal would come within the ambit of a transport terminal and hence would not be liable to tax in view of Section 65B of the Finance Act, 1994. He also submits that L&T had only been paying service charges and not the tax portion thereof. On the same premise, the stand of the L&T prompted them to obtain legal opinion. In legal opinion dt. 12.07.2007 they were informed that the matter was not free from doubt and they were advised to proceed on the basis of liability. As L&T were unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interest of Rs. 9,26,977/- totalling to Rs. 53,42,006/- made in respect of value of materials supplied free by their service recipient. The arguments in respect of demand of Rs. 45,28,653/- relating to free supplies (ST/27/2011) and the reliance thereon on the ratio laid by Apex Court in CST etc. Vs Bhayana Builders (P) Ltd. (supra) are reiterated. (iii) For the same reasons, the appellants are very much eligible for the refund said amount (iv) Ld. Advocate also fairly submits that they are not arguing on whether it is composite contract. He clarifies that the service provided by them to L&T are in the nature of service simplicitor and although they are providing consumables they are not taking stand that it is a composite contract. 4.1 On the other hand, Ld. A.R Shri K. Veerabhadra Reddy made a number of submissions which are broadly summarized as under : 4.2 Appeal ST/27/2011 (a) Issue I - Demand Rs. 2,49,31,259/- in respect of services provided for OT. (i) Ld. AR submits that it has been clearly held by the Tribunal in the Afcons Infrastructure Ltd. Vs CST Mumbai-II (supra), cited by Ld. Advocate that OT terminal of this site cannot be called as transport terminal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n services provided to L&T for On-shore Terminal Project. Ld. Advocate has been at pains to contend that notwithstanding the earlier Tribunal decision in Afcons Infrastructure Ltd. - 2015 (37) STR 850 (Tri.-Mumbai), in view of the recent decision of Tribunal in the case of L & T Ltd. - 2019 (1) TMI 389 CESTAT HYDERABAD, there is an area of doubt as to whether Onshore Terminal for loading of natural gas is a transport terminal only, which is similar to transportation by air, sea, road and hence services provided towards construction of which will be exempt from service tax liability. We find that the Ld. Advocate is making this assertion based on the following directions of the Tribunal in para-15 of the decision in L & T Ltd. (supra) : "15. The appellant has contended before us that even if the services rendered by it are held to be taxable under the head of CICS, even then no tax would be leviable, since what has been constructed was a transport terminal. The definition of CICS excludes transport terminal from the definition of the taxing entry. The Revenue on the other hand relied upon the judgement of the co-ordinate bench in the case of AFCONS Infrastructure Ltd. (supra) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. In the circumstances, the ratio laid down by the Tribunal in Afcons (supra) will continue to hold precedential value and this Bench also would only be following the said ratio in the best traditions of judicial propriety, especially as we do not see any new grounds or reasons to differ or depart from the said ratio. It is also pertinent to note that though an appeal was filed by Afcons against the said Tribunal decision and admitted by Hon'ble Bombay High Court as reported in 2016 (44) S.T.R. J209 (Bom.), however, there is no stay granted against its operation. Therefore, applying the ratio laid down in Afcons (supra), we hold that demand of Rs. 2,49,31,259/- with interest in the present proceedings confirmed by the original authority and upheld by the Commissioner (Appeals) for which appeal has been filed will sustain. The appeal of the appellant on this score is therefore rejected. (b) Issue II. Penalty of Rs. 2,49,31,259/- imposed by the adjudicating authority Ld. Advocate has submitted that appellants were under bonafide impression all through that OT would come within the ambit of transport terminal. It appears that they were taking up the matter more than once with L& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be set aside, which we hereby do. Appeal on this issue is allowed, with consequential benefits, if any, as per law. 6.2 Appeal ST/40435/2014 (i) This appeal pertains to rejection of refund of Rs. 23,74,026/- being the amount of service tax discharged by the appellants in respect of OT project of L&T. As we have already held in para 6.1 above that, in view of the ratio of Tribunal's decision in Afcons (supra), there cannot be any escape from service tax liability in respect of the construction services provided for the OT terminal, the prayer of the appellant for any refund of this tax amount already discharged towards the said liability will not have any merit. Appeal on this score is therefore rejected. 6.3 Appeal No.40436/2014 This appeal pertains to rejection of refund of Rs. 53,42,006/- being the amount of service tax of Rs. 44,15,029/- and interest of Rs. 9,26,977, made in respect of value of materials supplied by their service recipient. We find that the ratio laid down by the Hon'ble Apex Court in Bhayana Builders (supra) will apply on all fours to this issue also. This being so, the rejection of refund of Rs. 53,42,006/- cannot be sustained and will require to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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