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TMI Blog2020 (7) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... le litigation on the issue whether service tax can be levied on individual WCS prior to its introduction from 01/06/2007 and the same was finally settled by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . In this case, the Apex Court laid down the law on various aspects of levy of service tax on WCS. The Apex court has held that since as per Section 67, service tax is leviable on gross amount charged . The levy of service tax on CICS/CCS would be applicable only in case of pure service contracts whereas composite contracts involving transfer of property in goods would be liable to service tax only under WCS from 01/06/2007 as statutory mechanism to arrive at the value of service has been prescribed only under WCS from 01/06/2007. The Apex Court held that since the Finance Act had not laid down any charge or machinery to levy and assess service tax on individual WCS prior to 01/06/2006, hence the levy on such composite WCS prior to that date has no constitutional validity. Demand raised for the reason that the appellant did not intimate the Department about their intenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme for payment of Service Tax) Rules, 2007 for the ongoing project prior to 01/06/2007 for the period from June 2007 to March 2009. iii. I hereby confirm an amount of ₹ 12,49,16,628/- (Rupees twelve crore forty nine lakh sixteen thousand six hundred and twenty eight only) being service tax, education cess and higher secondary education cess short paid by the assessee on the taxable services rendered during the period 01/12/2005 to 31/03/2009, under proviso to Section 73(2) of the Finance Act, 1994 (as detailed in annexure B to the show-cause notice). iv. I order that the assessee shall pay interest at the appropriate rate on the amount confirmed above under Section 75 of the Finance Act, 1994; v. I impose a penalty on the notice under Section 76 of the Finance Act, 1994, calculated @ ₹ 100/- (Rupees one hundred only) for every day starting from the due date till 17/04/2006 and thereafter i.e. from 18/04/2006 @ ₹ 200/- (Rupees two hundred only) or 2% of such tax per month, whichever is higher, till 10/05/2008, subject to a ceiling that the total amount of the penalty payable under Section 76 shall not exceed the service tax, education cess and seconda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the service tax, education cess and secondary higher education cess payable for the period. 2. Briefly the facts of the present case are that the appellant is a private limited company engaged in the business of providing construction service to its clients as per agreements executed by them. Appellants are also registered under the Central Excise for the purpose of payment of service tax and are engaged in construction of various commercial buildings as well as residential complexes. Service tax was imposed under Commercial or Industrial Construction Service (CICS, for short) w.e.f. 10/09/2004, on Construction of Complex Services (Residential) (CCS, for short) w.e.f. 16/06/2005 and Works Contract Service (WCS, for short) w.e.f. 01/06/2007. The appellant had been paying service tax on the taxable value determined after availing the exemptions in terms of Notification No.15/2004-ST dt. 10/09/2004, No.18/2005-ST dt. 07/06/2005 and No.1/2006-ST dt. 01/03/2006 which provide for 67% of abatement on the gross amount charged, till 31/05/2007. From 01/06/2007, the appellant started paying service tax @ 2%/4% on the receipts under the Works Contract (Composition Scheme for payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied under CICS/CCS and changing the classification into WCS midway is not permissible. Even in respect of fresh contracts after 01/06/2007, it was alleged that appellant is liable to classify the same only under CICS/CCS, since they have not exercised their option to pay the service tax under the composition scheme under WCS. Accordingly both in respect of the ongoing contracts and fresh contracts, demand of service tax has been made under CICS/CCS without granting the benefit of 67% abatement on the ground that some of the material were supplied by the customers. After following the due process, the Commissioner vide the impugned order confirmed the demand in both the show-cause notices. 3. Heard both the parties and perused the records. 4.1. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the issue involved in the present case is no more res integra and has been settled by the Apex Court in the case of CST Vs. L T Ltd. [2015(39) STR 913 (SC)] which has laid down the law on various aspects of levy of service tax on WCS. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been supplied by the appellant which is not in dispute and to that extent, there is an element of transfer of property of goods involved in the contracts and the appellant is also paying appropriate VAT thereon. 4.3. Learned counsel submitted that without prejudice to the foregoing stand, benefit of 67% abatement under CICS and CCS has been denied to the appellant on the ground that the gross amount charged by the appellant does not include the value of all goods, as cement and steel are supplied by the customers. In this connection, the appellant relied upon the decision of the Larger Bench of the Tribunal in the case of Bhayana Builders Pvt. Ltd. Vs. CCE [2013(32) STR 49 (Tri. LB)] rendered on 06/09/2013 wherein it has been held that while claiming abatement of 67% under these services, the value of materials supplied by the customers need not be included. This decision has also been upheld by the Hon ble Supreme Court vide 2018(10) GSTL 118 (SC). He further submitted that after the decision of Apex Court in L T Ltd. cited supra, such contracts are not at all liable to service tax under CICS/CCS thereby the question of abatement is not at all relevant. The decision of Large ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued. Further the appellant have not suppressed any information from the Department and has been regularly filing the returns and supplying the information as and when asked by the Department. In such circumstances, there is no justification for invoking the extended period of limitation and the demand is liable to be set aside on the ground of time bar also. He also submitted that similar issue has been raised for the earlier period also and hence extended period cannot be invoked and the demand is liable to be set aside. 5. On the other hand, the learned AR reiterated the findings of the impugned order and submitted that even prior to 01/06/2007 from which WCS was introduced in the Finance Act, 1994, the construction services like CICS and CCS were subject to levy of service tax. These services have not been deleted or omitted from the act ibid after 01/06/2007 when WCS was introduced. This can only mean that after 01/06/2007 also such services are liable to service tax being composite contracts. 6.1. After hearing both sides and perusal of the material on record and after going through the various decisions relied upon by the appellant, we find that it is not in dispute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects The Explanation of the said provision also contained the definition of WCS. After the introduction of WCS, the appellant had started paying service tax by classifying their services into WCS and started availing the benefit of (Composition scheme for payment of service tax) under Service Tax Rules, 2007. Revenue raised the objection by issuing show-cause notices alleging that the appellant is liable to pay service tax under CICS/CCS only and changing the classification into WCS midway is not permissible. So much so, the Revenue was of the view that even in respect of the fresh contracts after 01/06/2007, the appellant was liable to classify the same only under CICS/CCS. Since they have not exercised their option to pay service tax under the composition scheme under WCS and accordingly both in respect of ongoing contracts as well as fresh contract, demand of service tax has been confirmed under CICS/CCS without granting the benefit of 67% abatement on the ground that some of the material were supplied by the cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice 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 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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