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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 ..... of materials should be excluded from the value for computation of duty, or not - HELD THAT:- A larger bench of the Tribunal in Bhayana Builders (P) Limited vs CST, Delhi [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] , had taken up the reference of a similar matter relating to free supplies of goods received during construction activities for consideration, holding that The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994. The judgment was affirmed by the Supreme Court. Although a reference to the judgment and its applicability have not been canvassed here, 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. Thus it is held that the value of goods and materials supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the audit of accounts of M/s. Bharathi Constructions, Erode by the officers attached to Salem Commissionerate in November 2008, it was noticed that the appellants had carried out erection and installation related work to the tune of Rs.34,96,200/- and no service tax had been paid by the appellants. It was ascertained from the records that the appellants were liable to pay Rs.4,79,603/- towards service tax for the period 2009 10. On the above basis, Show Cause Notice (SCN) dated 22/02/1012 was issued to the appellants. After 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 of the OIO. The service tax liability for the services rendered by them correctly falls under the category of Erection, Commissioning and Installation under Section 65 (39a) of the Finance Act 1994. She further reiterated the findings given in the impugned order and prayed that the appeal may be upheld. 7. We have heard the rival parties. We find that the issues to be decided are whether, a) the activity performed by the appellant amounts to manufacture. b) the value of materials should be excluded from the value for computation of 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 one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying or other installations for transport of fluids; or (c) heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work; or (d) thermal insulation, sound insulation, fire proofing or water proofing; or (e) lift and escalator, fire escape staircases or travelators; or (f) such other similar services; The Blacks Dictionary (revised fourth edition) at page 1592 defines Structure as under; STRUCTURE. Any construction, or any production or piece of work artificially built up or composed of parts joined together 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below. 16. In conclusion we answer the reference as follows : (a) The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994; The judgment was affirmed by the Supreme Court. Although a reference to the judgment and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purely interpretative in nature and is not a fit case for imposition of penalty. The appellant has relied upon the following judgment cited below in this regard. a. G. Ramamoorthi Construction (I) Pvt. Ltd. Vs. CCE, Coimbatore 2019 (20) GSTL 297 b. Ninwat Construction Co. Vs. CCE, Jaipur 2017 (52) STR 280 (Tri. Del.) c. Mackintosh Burn Ltd. Vs. Commissioner of Service Tax, Kolkata 2020 (35) GSTL 409 (Tri. Kolkata) d. Bansal Cylinder Tubes Ltd. Vs. CCE, Haldia 2019 (27) GSTL 243 (Tri. Kol.) We, however, find that the appellant has not cited any judgment or circular during the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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