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TMI Blog2021 (12) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... The RMC cannot be unloaded at a particular place and thereafter shifted the same to the particular place at site. Due to peculiar nature of RMC, it is unavoidable to deliver at particular place where the RMC is required to be laid-down. It is also the fact that appellant being manufacturer of RMC, paying excise duty not only on the value of the goods but also on the value of service of pumping, laying of concrete and the same is included in the sale value. Therefore, no value is escaped from payment of excise duty. Accordingly, the entire activity right from the manufacturing of RMC and delivery at the site of the customer is excisable activity. Merely because the contract says that it is works contract, the actual nature of transaction cannot be over looked. The appellant is treating the transaction of Works Contract in terms of VAT Act only - it is clear that manufacturing activity of RMC cannot be covered under Works Contract by any stretch of imagination. Therefore, even though there is contract of Works Contract basically for the purpose of VAT Act, cannot be applied in the present transaction of manufacture and sale of goods in terms of Section 2(f) of Central Excise Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since March 2011 at the rate 1.03% and since 17 March 2012 at the rate of 2.06%. Having entered into contract with the buyer of RMC which is of works contract which include supply of RMC and laying of RMC at the buyer's site. The case of the department is that it is a composite contract for supply and laying of RMC to the laying of RMC falls under works contract and liable to service tax. Accordingly, a show cause notice dated 02.05.2016 was issued. The said show cause notice was re-adjudicated as per the directions of Hon'ble Gujarat High Court and accordingly, the impugned order-in-original dated 12.02.2018 came to be passed wherein it was held that activity of the appellant i.e. supply of RMC along with laying of RMC at buyer's site is classifiable as Works Contract service upto 30.06.2012 and from 01.07.2012, under the category of declared service under Section 66E of Finance Act, 1994. Consequently demand of service tax amounting to ₹ 4,37,21,517/- for the period 01.04.2011 to 31.03.2015 was confirmed under sub-Section 2(2) of Section 73 of Finance Act, 1994. Interest under Section 75 was demanded and imposed penalty on the appellant and also on the director and employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be with all your material, labors, tools and plant etc. The terms of the supply also under the condition of works contract. For sales tax/ VAT purposes, the activity is considered and allowed by VAT authority as works contract. He submits that the department has made the aforesaid terms and condition the sole ground for treating the activity as Works contract for levy of service tax as per show cause notice and impugned order while disregarding the fact that the product is excisable goods. He submits that department has raised demand of service tax on all the 100% clearances even though in case of 40-50% of total sales, the delivery is simply effected by unloading RMC at customer's given premises i.e. without pumping etc. Therefore, in respect of this 40-50% of total sales, in any case, will not fall under the category of works contract service. He submits that the entire basis for treating the transaction as works contract is the purchase order dated 01.04.2014 from BRG Group. In the said contract, apart from the fact about supply of the RMC, there are stipulated additional requirements of transporting, laying, using concrete pump and finishing concrete with machineries. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and laying as Works Contract even than verdict of the Hon'ble Tribunal is upheld by the Hon'ble Supreme Court in favour of the assessee in the case of GMK Concrete Mixing Pvt. Limited vs. CST. - [2012 (25) STR 357 (Tri.)] 2015 (38) STR J113 (SC). He submits that in the case of Ultratech Concrete vs. CST - 2016 (44) STR 274 (Tri. Del.), the Revenue's contention was to treat the transaction as Commercial and Industrial Construction Services, however, the Tribunal held in favour of the assessee. He also placed reliance on the following judgments:- (a) 2016 (42) STR 866 (Tri.) - Vikram Ready Mix Concrete (P) Limited vs. CST - 2016 (42) STR J282. (b) 2018 (11) TMI 1470 - CESTAT Chennai - CCE vs. Larsen & Toubro Limited (c) 2011 (8) TMI 1037 - Karnataka HC - ACC Limited vs. State of Karnataka 5. He further submits that mere payment of Sales tax/ VAT can not bring the activity under Works Contract Service since for Service Tax purpose, the definition given in Finance Act, 1994 will alone be applicable. In this regard, he referred to the CBEC Clarification in Para 6.8.6 of CBEC Education guide. He further submits that it is settled law that definition of works contract and VAT la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, High Court and Supreme Court. In fact, in judgments, the department has taken a contradictory stand that whether the activities are Works Contract service or Manufacturing. Therefore, there is no malafide on the part of the appellant. Accordingly, the demand for extended period is not sustainable. With the above various submissions, the appellant pray that their appeal be allowed by setting aside the impugned order. 10. Shri S.N. Gohil, learned Superintendent (Authorised Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that appellants with their client has agreement in respect of works contract which includes supply of RMC along with some services such as laying of RMC at the recipient's site and therefore, it is correctly falls under the service of works contract. He submits that all the judgments relied upon by the appellant are in respect of supply of goods unlike in the present case, the contract of supply of goods as well as service. Therefore, the judgments relied upon by the appellant are not applicable in the present case. He placed reliance on the following Board Circular and as well as judgments:- (a) F.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etch of imagination. Therefore, even though there is contract of Works Contract basically for the purpose of VAT Act, cannot be applied in the present transaction of manufacture and sale of goods in terms of Section 2(f) of Central Excise Act, 1944. The department has very much accepted the activity of the appellant as manufacturing and collected the excise duty on the entire value of RMC which includes the pumping and laying of RMC at site. Therefore, the department cannot take two stands, in one hand manufacturer for demanding excise duty and on the same activity, on the other hand demanding service tax under Works Contract. In various judgments this issue has been considered time and again. Some of the judgments are cited below:- (1) GMK Concrete Mixing Pvt. Limited vs. Commissioner of Service Tax - 2012 (25) STR 357 (Tri. Del.) "5. Record does not reveal involvement of any taxable service aspect in the entire supply of RMC. Rather the contract appears to be a sales contract instead of a service contract. In absence of cogent evidence to the effect of providing taxable service, primary and dominant object of the contract throws light that contract between the parties was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the customer, the RMC is to be delivered to the customer. The choice of taking the delivery is given to the customer. He has the option of getting the entire RMC dumped at the site from the lorry or he has also been provided an option to get the RMC to a particular place such as roof top or any floor. Therefore, the RMC is delivered by pumping the RMC from the lorry to the specified place by the customer. All expenses incurred till the delivery constitutes sale price. In order to deliver the RMC at the specified place, if the assessee uses the pump, then the charges collected by the assessee from the customer as pumping charges form part of the sale price. If the RMC is not delivered through pumping, then the charges is not collected from the customer and it will not form part of the sale price. Therefore, the sale transaction of the RMC gets completed only when it is delivered at the point where it is finally put to use. All expenses incurred till such stage, if such delivery includes the service of pumping then the pumping charges are also included in the pre-sale expenses and hence, form part of the taxable turn over. In a contract of this nature, there is no dual role pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art and parcel of manufacturing activity. In view of this settled position, merely because the contract showing as Works Contract, the physical nature of transaction cannot be overlooked. 14. As per above view, which is clearly supported by various judgments reproduced above, we are of the clear view that the activity of the appellant is pre-dominantly of manufacture and sale of goods. Accordingly, the same cannot be charged with service tax under Works Contract service. 15. The appellant have made alternate submissions about quantification of demand inasmuch as the impugned order confirmed the demand on the 60% of the value of contract whereas, as per rule 2A(i), the value of goods should be adopted and only service portion should be charged for service tax. The relevant Rule 2A(i) is reproduced below:- "2A. Determination of value of service portion in the execution of a works contract.- Subject to the provisions of section 67, the value of service portion in the execution of a works contract , referred to in clause (h) of section 66E of the Act, shall be determined in the following manner, namely:- (i) Value of service portion in the execution of a works contract shall be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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