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TMI Blog2020 (10) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... to 28.02.2006 the same is not eligible for utilization for the month of March 2006 and onwards. Whereas the appellant submits that the restriction in taking cenvat credit of service tax on input services has commenced only from 01.03.2006; from this date onwards the appellant is barred from taking cenvat credit of service tax on input services; cenvat credit, availed, on input services under the provisions of Rule 3(1) of the Cenvat Credit Rules, 2004 till 28.02.2006 does not lapse; the appellant is permitted by Rule 4 of the Cenvat Credit Rules, 2004 to utilize such cenvat credit; Rule (4)(e) allows the appellant to utilize the cenvat credit so taken for payment of service tax on any output service. The issue is no longer res integra; there is no provision under Notifications 1/2006 or 15/2004 that such credit legally availed prior to 1.3.2006, under the provisions of CCR,2004, would lapse. Therefore, the appellants are eligible to utilise the cenvat credit, availed by them, on inputs/input services, prior to 1.3.2006. we find that to that extent demand is not sustainable. Whether the Appellant is a service provider rendering services of construction of residential compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65(105)(zzq) of the Finance Act, 1994. During the course of Audit by department, it appeared the appellants paid the service tax by utilizing the cenvat credit for the month of March 2006 and had also availed the abatement of 67% on the total taxable value under No.12/2003-ST dated 20.06.2003 in violation of Notification No.01/2006 dated 01.03.2006; appellants are liable to pay Service Tax and education cess amounting to ₹ 1, 03, 22,449 during the month March 06. Further it appeared that the appellant enters into an agreement to construct a house/flat on behalf of the customers; constructs/gets it constructed from his sub-contractors; collects the amount from his customers; as such cannot be treated as developer who sells flats/houses on their own and that the said services are taxable services defined under section 65(105)(zzzh) of the Finance Act, 1994 w.e.f. 07.06.2005 and the Appellant is liable to pay service tax of ₹ 6,79,14,900 during the period 16.06.2005 to September 2007. A show cause Notice, dated April 19, 2011, demanding duty as above along with interest, invoking extended period and proposing to impose penalties under Section 76 and Section 78 of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties P Ltd Vs CGST CE, Chennai North 2019 (28) GSTL 355 (Tri-Chennai). (iv). URC Construction (P) Ltd Vs CCE, Salem, 2017 (50) STR 147 (Tri-Chennai). 2.1. Learned Advocate further submits, without prejudice to the above contentions, that it is a settled proposition in law that the Appellate Tribunal is not competent to make out in favour of Revenue, a case which revenue never canvassed and which the assessee was never required to meet; therefore, though the Adjudicating Authority has held that the service provided by the developer in the case of such tripartite agreement is liable to service tax placing reliance on the Honourable Apex Court judgement in the case of M/s. K. Raheja Development Corporation Vs State of Karnataka, 2006 (3) STR 337 (SC), it is submitted that the decision was rendered while clarifying the scope of the definition of 'works contract' based upon the provisions of the Karnataka Sales Tax Act, 1957. He submits that it would tantamount to making a new case against the Appellant even for the period after 01.06.2007; the proposal that the Appellant is covered under works contract service was never raised in the SCN; adjudicating/ appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered therein and hence the said clause cannot cover composite contracts, as held in Suresh Kumar Bansal Vs UOI, 2016(43) STR 3 (Del) and Vaani Kapoor v. CST, 2019 (25) GSTL 534 (Del) in this regard. 3. Learned Advocate submits that the denial of abatement under exemption Notification No.1/2006-ST and the consequent demand of Service Tax on the full amount is wholly untenable; Notification No.1/2006 does not specify that the appellant is not entitled to the cenvat credit of input services availed prior to 01.03.2006; Notification No.15/2004 only barred the availment of the credit of duty paid on inputs or capital goods; it did not take away the right of the appellant to avail the credit of duty paid on input services under the provisions of the Cenvat Credit Rules, 2004; the restriction in taking cenvat credit of service tax on input services has commenced only from 01.03.2006; from this date onwards the appellant is barred from taking cenvat credit of service tax on input services; cenvat credit, availed, on input services under the provisions of Rule 3(1) of the Cenvat Credit Rules, 2004 till 28.02.2006 does not lapse; the appellant is permitted by Rule 4 of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des and perused the records of the case. The issues that require our consideration are as follows. Whether in the facts and circumstances of the case. (i). Whether the demand of service tax of ₹ 1,03,22,449, on the full amount received towards provision of services, is justified denying the benefit of notification 1/2006 -ST dated 01.03.2006 claimed, on the ground that Cenvat credit was availed under Notification 15/2004 dated 10.09.2004, in the month of March 2006? (ii). whether the Appellant is a service provider rendering services of construction of residential complexes , in terms of Section 65 (30) (a) of the Finance Act, 1994 read with Section 65 (105) (zzzh)ibid and as to whether, the demand of Service Tax of ₹ 6,79,14,900 for the period from 16.06.2005 to 30.09.2007 against the appellants is tenable? (iii). whether the show cause Notice is time barred? 7. Regarding the availability of exemption contained in notification No.01/2006 dated 01.03.2006 to the appellant, learned Commissioner finds that the contention of the appellant is not correct because the Notification No.15/2004 dated 10.09.2004 automatically gets nullified after the introductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai) that when the input services were received by the appellants,there was no bar for availment of cenvat credit; the said notification does not specify that the assessee is not entitled for the cenvat credit of input services prior to 1-3-2006. 7.2. In view of the above, we find that the issue is no longer res integra; there is no provision under Notifications 1/2006 or 15/2004 that such credit legally availed prior to 1.3.2006, under the provisions of CCR,2004, would lapse. Therefore, the appellants are eligible to utilise the cenvat credit, availed by them, on inputs/input services, prior to 1.3.2006. we find that to that extent demand is not sustainable. 8. Coming to the second issue of demand of Service Tax, in terms of Section 65 (30) (a) of the Finance Act, 1994 read with Section 65 (105) (zzzh), for the period from 16.06.2005 to 30.09.2007, learned commissioner finds that the tripartite agreement is executed between the owner of land, the service provider for sale/canvass and apartment purchaser; main activity mentioned in the agreement is to develop the building and the job is assigned to the service provider; as such the role of service provider is constructin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks contracts, such as are contained 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 property in goods transferred in the execution of a works contract. .... 43 . We need only state that in view of our finding that the said Finance Act lays down no charge or machinery to levy and assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing elements both of transfer of property in goods as well as labour and services. 44. We have been informed by counsel for the revenue that several exemption notifications have been granted qua service tax levied by the 1994 Finance Act. We may only state that whichever judgments which are in appeal before us and have referred to and dealt with such notifications will have to be disregarded. Since the levy itself of service tax has been found to be non-existent, no question of any exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, not leviable to service tax before 1.6.2007. The show-cause notice proposes to demand service tax on construction of residential complexes service after 1.6.2007, even though they are works contracts being composite in nature. Therefore, service tax demand after 1.6.2007 also cannot be confirmed. We find that various case laws, cited by the learned advocate for the appellants, wherein it was held that the department cannot traverse beyond the show-cause notice are squarely applicable. For that reason, the Tribunal also cannot confirm the duty for a period after 1.6.2007 under construction of residential complexes service. We also find that the case law submitted by the learned AR for the department are not applicable on the facts of the case. 12. In view of the above, the appeals are liable to be allowed and impugned order is to be set aside. Learned advocate for the appellants has also raised the issue of limitation and submits that the facts are known to the Department when the audit was conducted in 2007 and therefore, the show-cause notice is time barred. Per contra, learned AR has relied upon the judgment of Supreme Court in the case of Mehta and Company (supra) and s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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