9911796707
TMI Blog2022 (7) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of these cases are that during the period October 2004 to March 2009, the Appellant undertook the activities such as construction or fabrication works as sub-contractor of L & T Ltd in respect of Flyover/ Bridge at Kolkatta and Allahabad; construction or fabrication works as sub-contractor of L & T Ltd in respect of Metrorail and Monorail at Delhi and Vadala; construction or fabrication works as sub-contractor of Geodesic Techniques in respect of Airport; fabrication of Steel Structures as sub-contractor of Techno Fab; construction or fabrication works as sub-contractor of L & T Ltd in SEZ unit of Reliance Petroleum Ltd, Jamnagar and in SEZ unit of Reliance Oil & Gas Terminal, Kakinada; work of fabrication of steel structures as sub-contractor of L & T Ltd at various sites such as Panipat for Indian Oil Corporation and Sipat for NTPC. The Appellants did not charge and recover service tax from their principal contractors namely L & T Limited, Geodesic Techniques and Techno Fab on the above activities and did not pay service tax. 3. The Director General of Central Excise Intelligence (DGCEI), Ahmedabad, in or about April 2009, initiated investigations and based on Appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract/work contract, satisfies the definition of Erection, Commissioning or Installation given in Section 65 (39a) of the Finance Act 1994 has to be examined and decided with reference to the terms of each individual sub-contract/ work contract and the nature of work involved in execution thereof; that no blanket presumption can be made because of the way the nature of business is described in the Annual Report/ audit report. He submitted that construction activity undertaken by the Appellant as sub-contractor in respect of Flyovers, Bridges, Railways, Airport etc. are not liable to service tax under the taxable service of "Erection, Commissioning or Installation" covered by Section 65 (39a) of the Finance Act 1994. 6. He submitted that activity undertaken during the period 2004-05, 2005-06 and 2007-08 by the Appellant as Sub-Contractor of L & T Ltd, in respect of Flyover/ Bridge at Kolkatta and Allahabad was one of construction service which is not liable to service tax, much less was it liable to service tax under the taxable service of "Erection, Commissioning or Installation" as defined in Section 65 (39a). The definition of "Commercial or Industrial Construction Service" as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held that supplying and fixing of Metal Crash Barriers along the Highways is part of activity of construction of roads and therefore not liable to service tax and the same cannot be considered as taxable activity of erection, commissioning or installation of plant, machinery or equipment. Similarly, in the case of PES Engineers P. Ltd v CST - 2017 (17) GSTL 57, the issue was whether fabrication and installation of Shaft Liners/ Steel Liners/ Pen Stocks in the course of construction of Tunnels is liable to Service Tax under the Service of Erection, Commissioning or Installation. It was held in that judgment that the fabrication and installation of the said Liners/Shafts/Pen Stocks was an integral part of construction of Tunnel and cannot be said installation of plant, machinery or equipment, independently of the Tunnel since without the said Liners/Shafts/ pen stocks, the tunnel would be incomplete. He submitted that applying the ratio of the aforesaid decisions to the present case, it would follow that construction or fabrication of Beams, Struts, etc undertaken by the Appellants for Bridges and Railways is integral part of Construction of Bridges and Railways as without which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness Auxiliary Service covered under Section 65 (19) (v) of Finance Act 1994, which, was exempted by Notification No.8/2005-ST dated 1-3-2005. He pointed out by referring from the appeal papers that Techno Fab had by their letter specifically instructed the Appellants not to charge service tax for that reason. He submitted that the Commissioner has wrongly held that Appellants have not submitted documentary evidence in support of contention based on Notification No.8/2005-ST. It is not in dispute that the production was done with materials of the clients at their site and therefore Notification No.8/2005-ST is satisfied. Even if the said exemption is to be held to be inadmissible there is no demand for Service tax in the Show Cause Notice under the category of Business auxiliaryservice. The demand in the Show Cause Notice is under Erection, Commissioning or Installation, which is clearly not tenable in law. 11. As regards, fabrication of Hulls/ Parts of body of Ships, etc for ABG Shipyard Ltd, he submitted that the same was not undertaken by Appellant and in any event, the same is liable to service tax under "Erection, Commissioning or Installation", that it is an admitted positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Ltd v CCE - 2009 (14) STR 129 (upheld in 2011 (21) STR 500), (a) Religare Securities Ltd v CST - 2014 (36) STR 937, (b) Lanxess Abs Ltd v CCE - 2011 (22) STR 587 (c) K.K. Appachan v CCE - 2007 (7) STR 230. 13. He further submitted that even assuming that service tax was payable, the question whether the sub-contractor is liable to pay the service tax, itself had not been free from doubt. The Central Board of Excise and Customs changed its previous view that service tax is not payable by sub-contractor, by Circular dated 23rd August 2007. Even after the said Circular, there were conflicting decisions of the Tribunal, necessitating reference to Larger Bench and only recently by its decision in CST v Melange Developers - 2020 (33) GSTL 116 Tri (LB) the Larger Bench decided the said issue, that is settled law that where the issue has not been free from doubt requiring reference to Larger Bench, the larger period of limitation cannot apply. 14. Learned Counsel for the appellant pointed out that in any event Commissioner of Central Excise, Surat did not have jurisdiction to pass Order demanding service tax, when the alleged taxable events had occurred outside his jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of taxable service of "commission and installation service" under section 65 (29) of the Act as it existed upto 09.09.2004 and "erection, commissioning and installation service" under section 65 (39a) of the Act. In this behalf he referred to para 20 of the Order of Commissioner. 16. As regards, the appellants plea that they had not charged service tax in their invoices raised on their principal contractor and that service tax was already paid by the principal contractor is not tenable in law; he cited CBEC Circular No. 96/2007-ST dated 23.08.2007 and Larger Bench decision of Tribunal in the case of Melange Developers P. Ltd - 2020 (33) GSTL 116 Tri- LB and Shree Gurukrupa Construction Company - Final Order No. A/11471/2019 to substantiate the point that sub-contractor was liable to pay service tax and that payment of service tax by the main contractor was not a deciding factor as far as taxability of the service rendered by the sub-contractor is concerned. In support of his argument, learned AR also placed reliance on the following judgments:- (a) Shree Gurukrupa Construction Company [Final Order - A/11471/2019] (b) VPSSR Facilities vs. Commissioner of VAT [WP (C) 7843/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rection, Commissioning or Installation covered by Section 65 (39a) of the Finance Act 1994; no efforts made to find out whether the service rendered under each individual sub-contract/work contract satisfies the definition of Erection, Commissioning or Installation given in Section 65 (39a) of the Finance Act 1994. 20. From the Perusal of show cause notice and records viz. work order, bills etc, it emerges that the appellant undertook the activity of fabrication of various structural items as sub-contractor of L & T, Techno Fab & ABG Shipyard. It also emerges that the said activity of fabrication of structural items viz. beams structs, pylons etc was carried out at various places in India in respect of Flyover, Bridges, Railway and Airport. Fabrication of structural items viz beams, structs, pylons etc which would become part of civil structure viz. Flyover/Bridge etc would therefore fall within the definition of taxable service of "Commercial or Industrial Construction Service" as given in Section 65 (25b) of the Finance Act 1994 which specifically excluded service in respect of Bridges, Railways, Airport etc from the tax net. Flyovers/Bridges cannot be equated with Plant, Machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility for service tax in respect of supply and installation of Metal Crash Barriers along the side of highways by the appellant. On perusal of the submissions made by the appellant, we find that on all three points raised by the counsel, they have a strong case. 5. Regarding the nature of service rendered by the appellant it is clear from the work order as well as the observations of the lower authorities that these are composite work involving supply of materials and provision of service. These are rightly to be categorized under works contract and the Hon'ble Supreme Court in the case of CCE, Kerala v. Larsen & Toubro Ltd. (supra) held that prior to 1-6-2007 there is no charging section for levying service tax on works contract. We find on this ground alone, the appellant will succeed. 6. We also find that the classification followed by the lower authorities is not sustainable. From the nature of work and the material involved it is clear that supplying and fixing Metal Crash Barriers along the highways cannot be considered as erection and commissioning of any plant and machinery or similar equipments. 7. The Metal Crash Barriers are essentially part and parcel of highways ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was not liable to service tax. It is held in the following decisions that fabrication of steel structures is not liable to service tax under the category of "Erection, Commissioning and Installation":- (a) Hazi Ap Bava& Co vs. CCE - 2014 (33) STR 470, "6. We have thoroughly examined the show cause notice as to what was the requirement of issuing the same. That makes clear that Revenue intended to bring item No. 1, 3 & 6 in the purview of Service Tax under Section 65(39a) of Finance Act, 1994. We are conscious that Service Tax is not commodity taxation. When the fabrication work is very clear from the work order, that does not submit to any taxable entry as the law exists. Had the fabrication been brought to any taxable entry, Revenue would have a case. In absence of such taxable entry, the erection, Commissioning or installation does not embrace fabrication for bringing the appellant to the fold of Section 65(39a) of Finance Act, 1994. Therefore, on such preliminary observation of the law, the appellant should succeed when paras 2 & 3 of the show cause notice has not made any effort to bring out service element involved in Sl. No. 1, 3 & 6 of the work order to the ambi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the various structurals. The Tribunal concluded that such as activity would amount to manufacture and not rendering of any service at this stage. As the said decision was not before the Commissioner at the time of adjudication, we deem it fit to set aside the impugned order and remand the matter for fresh decision in the light of the law declared in the above referred decision of the Tribunal 6. Apart from the above, we also note that as the main contractor has discharged the service tax liability on the gross value of the contract giver to him and the present appellant is only a sub contractor, the entire exercise would be revenue neutral. As we are remanding the matter, the said fact would also be verified by the Commissioner." (c) Plus Tech Engineering P. Limited vs. CCE - 2015 (39) STR 454. "After hearing both sides duly represented by Shri Anand Nainawati, learned advocate appearing for the assessee and Shri R.S. Srova, learned JDR appearing for the Revenue, we find that the service tax stand confirmed against the appellant by holding that they are providing service of 'Erection, Commissioning and Installation' to their clients. On the other hand, it is the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the activity undertaken by the appellant covered under Central Excise Tariff, amounts to manufacture. The decision referred by the learned SDR is not applicable in this case as in that case the work was undertaken by the appellant under a works contract for fabrication and laying of M.S. Pipes and in that process they fabricated the tank from bits and pieces of plates. The issue in that case was whether the resultant product at site which was part of the project was marketable and liable to Excise duty or not and in that context, it was held that the tanks were not parts of pipelines and hence the erection of tanks at site was held not amounting to manufacture. Here the issue before us is that whether the fabrication of structures by the appellants at the site of their principal amounts to service and is liable to service tax under the category of erection, commissioning and installation service. Hence, the decision referred to by the learned SDR is not applicable to this case. On the other hand, we find that the decision of Larger Bench in the case of Mahindra & Mahindra Ltd. reported in 2005 (190) E.L.T. 301 (Tri.-LB) is applicable to the facts of this case. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless there is evidence of suppression of facts or contravention with intent to evade payment of service tax, larger period of limitation of 5 years specified in the Proviso to said Section 73 (1) is inapplicable. It appears that non-payment of service tax could be on account of the belief that no service tax was payable in respect of the activities undertaken by the Appellants; that the very fact that various decisions of Tribunal referred to herein above have also held that no service tax is payable on activities such as those undertaken by the Appellants, itself shows that the Appellants' belief was reasonable and bona fide. It is settled law that where demand has been worked out based on the records of maintained by the assessee and where non-payment of service tax is on account of bona fide belief that no service tax was payable, the larger period of limitation cannot apply as held in the following judgements: Steelcast Ltd v CCE - 2009 (14) STR 129 (upheld in 2011 (21) STR 500), (a) Religare Securities Ltd v CST - 2014 (36) STR 937, (b) Lanxess Abs Ltd v CCE - 2011 (22) STR 587 and (c) K.K. Appachan v CCE - 2007 (7) STR 230. 26. Further, the question whether the sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
