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TMI Blog2023 (10) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax liability by claiming exemptions/ exclusions wrongly under Chapter V of the Finance Act, 1994. Further, it is the contention of the Department that the Appellant was short paying Service Tax on certain ongoing projects in terms of sub rule (2) of Rule 3 of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. 2.1 Accordingly, the Appellant was issued the periodical show cause notices which were confirmed by the Adjudicating Authority under different orders. The details of the show cause notices/OIO's/Appeals are as given below : Sl. No. Period SCN No. OIO No. Appeal No. Amount (Rs.) 1 01.06.2007to 31.03.2011 O.R. No. 120/2011-Adjn (ST) (Commr) dated 22.10.2011 OIO No. 11/2013- Adjn (ST) (Commr) dated 31.01.2013 ST/26383/ 2013-DB 24,08,46,851/- 2 01.04.2011to 31.03.2012 O.R. No. 75/2013-Adjn (Commr) (ST) dated 17.04.2013. OIO No. 97/2013- Adjn-ST(Commr) dated 21.11.2013 ST/20487/ 2014-DB 5,50,43,689/- 3 01.04.2012to 31.03.2013 O.R. No. 116/2014-Adjn (Commr) (ST) dated 07.05.2014 OIO No. HYD-EXCUS- 004-COM-035-15-16 dated 28.09.2015 ST/30015/ 2016-DB 5,16,93,652/- 4 01.04.2013to 30.09.2014 O. R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction which is for non-commercial or non-industrial purposes, service tax liability under WCS will not arise. Further, the Hon'ble High Court of Bombay, had an occasion to address the clause ii(b) of section 65(105)(zzzza) of the Act, in the case of CCE & ST, Pune-III Vs. B.J. Shrike Construction Technology Pvt. Ltd., - 2019 (25) GSTL 8 (Bom)., wherein it was held that - 16. The language employed in the definition clause is clear and unambiguous. The plain meaning as can be understood from the definition clause, more particularly, the clarification contained in clauses (i), (ii), (iii) is that the construction ipso facto is not leviable to service tax, but it is only when it is used, or to be used, primarily for "commerce" or "industry" or work intended for "commerce" or "industry" that service tax can be levied.Thus, it is only that construction which is to be used or primarily to be used for commerce that is subject to levy of service tax. 17. In the present facts, we find that dominant user of the sports complex is non- commercial. The definition uses the words "used or to be used primarily for commerce or industry" clearly indicating that the user is to be exclusively fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritten submission, that the Appellant has not submitted any documentary evidence issued by service recipient to show that the construction services are for non-commercial purposes, is little absurd, inasmuch as it is a settled law that what is obvious, need not be proved. It is widely known position that CWG-2010 was a sport event participated by the commonwealth nations, of which India is also one, for furtherance of sports and extending bilateral relationship between said countries, which was organized by the Commonwealth Organizing Committee and the Government of India. The construction of Sports Stadia and associated civil structures for CWG-2010 cannot be held as a commercial construction (primarily for the purpose of commerce or industry), by any stretch of imagination and are thus excluded from the ambit of 'works contract service' under Section 65(105)(zzzza) of Finance Act, 1994 and no Service tax liability arises. In any case, the Department has not produced any contrary evidence to this effect, neither in Show Cause Notice nor in Order-in-Original. 4.3 Another objection raised is that the Letter of Intent dated 04.08.2008 issued by M/s Engineers India Ltd., the Project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not alter the character of the transport terminal to a commercial building. It still remains a transport terminal for use of general public and mere presence of some commercial spaces created for public convenience would not make the said civil structures primarily for the purposes of commerce and industry. 5.2 For the period prior to 01.07.2012, the 'transport terminal' is clearly excluded from the main part of the definition of 'works contract service' under section 65(105)(zzzza) itself, which reads as follows: "to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams" In the light of the clear exclusion of the construction services in respect of 'transport terminals' from the definition of 'works contract service', there cannot be any levy of Service tax at all, prior to 01.07.2012. 5.3 For the period post 17.2012, Clause 13(a) of Notification No. 25/2012- ST dated 30.06.2012 clearly exempt construction of transport terminals from payment of Service tax, which reads as follows: "13. Services provided by way ofconstruction, erection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 30.01.2014was examined and interpreted by the Hon'ble Patna High Court in the case of Shapoorji Paloonji& Company Pvt. Ltd. Vs. C.C., C. Ex. & S.T., Patna - 2016 (42) S.T.R. 681 (Pat.), wherein it was held as follows: "11. We have heard learned counsel for the parties and found the arguments raised by Mrs. Nivedita Nirvikar are not sustainable in law. The Governmental Authority as defined in the Notification dated 30th January, 2014, means an authority or a board or any other body set up by an Act of Parliament or State Legislature. The provisions contained in sub- clause (i) and sub-clause (ii) of Clause 2(s) are independent dis-conjunctive provisions and the expression "90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution" is related to sub-clause (ii) of Clause 2(s) alone. The clause (i) is followed by ";" and the word "or". Therefore, each of the sub-clauses is independent provision. The condition of 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is relatable to only sub-clause (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to argue that absence or limits of security restrictions, unlike that elaborately designed, for obvious reasons at airports, should disentitle bus terminal from application as exclusion. Thus, 'terminals', such as the one impugned before us, are, in the absence of express legislative intent to limit application on the basis of scale of use or scale of access, within the ambit of exclusion from tax. 8. In view of the above, we find that the demand in the impugned order fails the test of law and must be set aside. The appeal is allowed." 5.6 Further reference is invited to the clarification sought by the Commissioner of Central Excise, Mysore Commissionerate vide C. No. IV/16/17/2009-HPU-ST dated 27.08.2009 sought for clarification regarding the taxability of Inter Model Transit Centre (IMTC) built by KSRTC, from the CBEC. The Board vide their letter in F. No. 137/93/2009-CX.4 dated 07.01.2010, clarified that they shall be classified by the essential characteristics of the construction. It further clarified that, prima facie, the construction of transport terminal by KSRTC could not be for commerce irrespective of the revenue that would be generated from its operations and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , geographically dividing the state. Farmers are required to sell their produce via auction at the mandi in their region. Traders require a license to operate within a mandi. Wholesale and retail traders (e.g. shopping mall owners) and food processing companies cannot buy produce directly from a farmer. 6.1 The demand in respect of construction of APMC Markets for the period pre and post 01.07.2012. 6.2 The Appellant submits that the service provided for construction of sub-market yard is not for commerce or industry, but it is a facility provided to the farmers by the Government of Karnataka through APMC, which itself is not an organization functioning with profit as motive and thus go outside the purview of definition of 'works contract service' under section 65(105)(zzzza) of the Act, as it does not come within clause (b) of explanation (ii) to the said Section, i.e., construction services meant primarily for the purposes of commerce and industry. Reference is invited to the decision of the Hon'ble Tribunal, Mumbai in the case of A.B. Projects Pvt. Ltd. Vs. Commissioner of Central Excise, Nagpur [2017 (5) G.S.T.L. 195 (Tri. - Mumbai)], wherein it was held that the constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not covered under the purview of commercial and industrial construction service." 6.3 For the period post 1.7.2012 also the construction services of APMC markets is entitled to the benefit of Notification No. 25/2012-ST as amended by Notification No. 2/2014-ST, since the services were rendered to the Government of Karnataka and the APMC is a non-commercial statutory body. 6.4 The objections/grounds raised with regard to APMC in the additional submissions filed by the Revenue are general in nature, and in the light of the submissions and precedent rulings, there is no need for specific rebuttals for such objections/grounds. COMPOSITION SCHEME-Ongoing Projects [Appeal No. ST/30015/2016]: 7. In Appeal No. ST/30015/2016, the Appellant is also contesting the demand of tax in respect of certain ongoing projects. Under the impugned order the benefit of abatement under Notification No. 1/2006-ST dated 1.3.2006 [Service tax shall be calculated on a value equivalent to 33% of the gross amount charged) was rejected erroneously on the ground that the Appellant have taken Cenvat credit of duty on inputs/capital goods and Cenvat credit on input services were taken, and differenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charging Service tax in terms of Rule 2A of Service tax (Determination of Value) Rules, 2006. The Ld. Commissioner, however, in the impugned order records that there is short payment of tax in respect of services rendered to NGHC- Ranchi to the extent of Rs. 7,04,639/- for the period July 2012 to March 2013 and Rs.7,10,971/- for the period from April 2013 to September 2014, with some unintelligible reasons, which the Appellant is unable to decipher and therefore are not in a position to counter. The Appellant, however, categorically denies the alleged short payment of tax and asserts that they paid the full and correct Service tax in terms of Rule 2A of the Service tax (Determination of Value) Rules, 2006 as per the worksheet filed before the Ld. Commissioner, during the adjudication proceedings. 8. Without prejudice to the above submissions on merits, the Appellant submits that the impugned orders, in Appeal Nos. ST/20487/2012 and ST/30015/2016 could not have invoked extended period of limitation, when the department is in complete knowledge of the construction services provided to CWG/various State Bus Terminals/APMC Yard, etc. at the time of issue of show cause notice vide O.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax itself is not sustainable the demand of interest on the tax demanded and penalties imposed are also liable to be set aside. 11. Further urges, in the light of the above submissions, it is prayed that this Tribunal may set aside the impugned order in toto and allow the appeal, with consequential relief(s). 12. Learned AR for Revenue relies on the impugned order. 13. He further urges, as regards the issue of abatement under Notification No. 1/2006-ST, that the appellant had produced CA certificate dated 14.08.2015 wherein it is certified that no Cenvat Credit is availed on the projects. However, on verification of ST-III returns of the appellant the said claim appeared to be untrue. CA certificate appears to be erroneous. It was also found that appellant have not filed any supporting documents about the value of the materials consumed in execution of the works contract. Appellant also did not produce any evidence in support of payment of VAT/Sales Tax for consideration of abatement as regards the material component. 13.1 As regards availment of composition scheme assessee is require to opt for the scheme under Rule 3(3) of Works Contract Composition Rules, 2007. However, Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minal is concerned, the same was exempt under the definition of works contract service under Section 65 (105) (zzzza), firstly, because the definition read with explanation (II) (b) specifically provides construction of a new building or civil structure primarily for purposes of commerce or industry. Further, the main definition provided the exclusion of transport terminals. Further, we find from 01.07.2012 as admittedly the service was provided to Government or Government Corporations, we hold the same are exempt under Clause No. 12 of Notification No. 25/2012-ST wherein clause - A provides for exemption of services provided to Government, Local Authorities or Government Authorities in respect of a civil structure or other original work meant predominantly for used other than for commerce nature or any other business or profession. 18. So far the construction done for Common Wealth Games - 2010 is concerned, we hold that the same was an International Sporting Event and not a commercial activity. Accordingly, we hold that the same was exempt and not taxable. 19. So far construction done for Delhi University, wherein the work was awarded through Engineers India Ltd., (consultant m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court held that in case of composite contracts, service tax cannot be demanded prior to 01.06.2007 under the existing heads of services like CCS, ECIS, CICS etc., as there was no mandate in the Act to bifurcate a composite contract and tax the service component. The Apex Court categorically held that prior to 01.06.2007 only simple contracts involving only service, and no deemed transfer of material can be subjected to service tax. Thus the issue of ongoing projects prior to 01.06.2007 stands settled by Hon'ble Supreme Court in the subsequent ruling of L & T in August, 2015. In the circumstances, as the scheme of composition was introduced for the first time for ease of business, and to avoid harassment to the assessees, the window to pay tax under the composite scheme was provided. The benefit of the scheme to the appellant was denied as it could not opt for composition scheme in due time. Thus, we hold that benefit of composition scheme is available to the assessee, and accordingly the denial of benefit of composition scheme is set aside. 20. So far the issue of benefit of abatement (for material) under the Notification No. 1/2006-ST is concerned, the appellant had initiall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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