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TMI Blog2023 (8) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... r due process of law, the original authority confirmed the proposals for demand of Rs.4,79,603/- under Section 73(1) of the Finance Act, 1994 along with interest, being the service tax liability for the services rendered by them under the category of 'Erection, Commissioning and Installation' under Section 65 (39a) of the Finance Act 1994, for the period 2009 - 10. Penalties were also imposed. Hence the appellant is before us in appeal. 3. No cross-objection has been filed by the respondent-department. 4. We have heard Shri M.N. Bharathi, learned counsel for the appellant and Smt. Anandalakshmi Ganeshram, learned Superintendent (AR) for the Revenue. 5. The learned counsel Shri M.N. Bharathi submitted that the appellant is providing taxable service under the category "Works Contract Service". The condition of the contract entered into with M/s Bannary Amman Sugars Ltd is only for repair of shed by replacing the worn out materials with fresh ones supplied by the said Bannari Amman sugars. The appellant also stated that such an activity being 'manufacture' is not exigible to service tax but only to Central Excise duty. The activity performed by appellants cannot be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty c) since the service tax is not shown separately in the invoice the consideration received should be treated as inclusive of duty d) the issue is purely interpretative in nature and is not a fit case for imposition of penalty We shall examine the issues sequentially. 8. At the outset it must be stated that the activity rendered by the appellant to M/s Bannari Amman Sugars Ltd is the only subject matter of the dispute. The appellant in their written submission during the hearing has stated that the letter of intent given by M/s Bannary Amman Sugars is only for repair of shed by replacing the worn-out materials with fresh ones supplied by the said Bannari Amman sugars. They have taken up the matter before the Commissioner Appeals who held that the specifications shown in the letter of intent pertains to the category of Erection, Commission or Installation Service. We find that a copy of the letter of intent has not been provided with the appeal papers, hence we have to rely on the extract as given in the SCN 22/02/2012 and the OIO dated 17/09/2012. The said document only speaks of the fabrication and erection of trusses, bracings, purlins etc. Even in the appellants reply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in some definite manner. C. K. Eddy & Sons v. Tierney, 276 Mich. 333, 267 N.W. 852, 855. That which is built or constructed; an edifice or building of any kind. . . ." The activity of skill and labour provided by the appellant is hence a service covered by the definition of erection, commissioning of structures as per section I05(39a)(i). The appellant has also not referred to any judgment where activities of a similar nature were held to be the manufacture of a factory shed. In fact, the appellant's plea was that their activities are of 'repair' which is far removed from their claim of manufacture of goods. 10. Their next averment is that the value of materials should be excluded from the value for computation of duty. The taxable service of erection, commissioning or installation is provided as per Sub-clause (zzd) of clause (105) of section 65. It states as under; "to any person, by a commissioning and installation agency in relation to erection, commissioning or installation." We find that the learned Original Authority has referred to the valuation of services under a contract being covered by Notification No-01/2006-ST dated 01.03.2006. The learned Commissioner Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its applicability have not been canvassed before us, it is felt that deciding the matter raised without examining the judgement would not help in developing good law, especially when judicial discipline requires us to follow the ratio of the Larger Bench. This being so we abide by the same and hold that the value of goods and materials supplied free of cost by M/s Bannari Amman Sugars Ltd are to be excluded from the value of the taxable service for computation of duty. 11. The appellant has further averred that since service tax is not shown separately in the invoice the consideration received should be treated as inclusive of duty. We find that a similar matter pertaining to Central Excise duty was examined by the Apex Court in the case of Commissioner of Central Excise, Delhi vs. Maruti Udyog Ltd 2002 (141) ELT 3 (SC) and Collector vs. Shri Chakra Tyres Ltd. 2002 (142) ELT A279 (SC) it was held that the total consideration received by the manufacturer be treated as cum-duty. The said consideration has to be apportioned between the assessable value and the excise duty leviable. Review petition filed against the said order also came to be dismissed [2005 (179) ELT A102 (SC)]. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant time which would show that there was a difference of opinion in the taxability of the service and help reach a conclusion that the issues involved were purely interpretative in nature, hence we are not able to accept their plea. We find that the appellant had failed to pay the service tax and also have failed to report provision of service in their periodical returns. Hence the fact that these activities were suppressed from the department with intention to evade payment of tax has substance. We are therefore not inclined to interfere with the imposition of penalty or issue of Show Cause Notice invoking the extended period of time limit.
13. Having regard to the facts of the case as discussed above, the matter is remanded back to the lower authority to determine the value of the taxable service afresh allowing cum-tax benefit and by not including the value of goods and materials supplied free of cost by M/s. Bannari Amman Sugars Ltd. Penalty may thereafter be imposed suitably as per law. The impugned order is partially set aside and modified as above. The appeal is disposed of accordingly.
(Pronounced in open court on 18.8.2023) X X X X Extracts X X X X X X X X Extracts X X X X
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