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TMI Blog2024 (1) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial or industrial Construction Service/Works contract service - period 2011-12 - HELD THAT:- For the period from 1.6.2007 up to 2012, works contracts could be taxed only if they fell under clause 65 (105)(zzzza) and only under this clause. The scope of this clause was limited and it did not include all composite works contracts involving supply or deemed supply of goods and rendering services but only some such services. Insofar as the construction of a building or structure is concerned, this clause applies to findings for commercial purposes - Even if the reasoning of the Commissioner, that it can also be used for commercial purposes is accepted, the essential nature of the building is not commercial. Therefore, it does not fall under section 65(105)(zzzza). The charging section of a tax statute must be strictly constructed and in case of any doubt, the benefit of doubt must go in favour of the assessee and against the Revenue. MDU is a university created by an Act of state legislature and is meant to provide education. Hence, we find that the service of construction of the auditorium in MDU is exempted during after 2012 also - the demand of service tax on this contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the service recipient - HELD THAT:- In the present case, by virtue of the service being rendered by the Appellant, they were liable to pay service tax in terms of provisions of Section 68. However, he did not record any findings on the question if the appellant s case was covered by notification no. 30/2012-ST and hence only 50% service tax has to be paid or if it is not covered, why - thus this matter also must be remanded to the Commissioner to examine and decide. Thus, the demands on the contracts for services rendered as sub-contractor to NBCC at Kidwai Nagar and in NOIDA SEZ are liable to be dropped. The demand regarding the contract with HSCC India must be remanded to the Commissioner to examine and record a finding on the claim of the appellant that it was covered by notification no. 30/2012-ST and hence was liable to pay only 50% of the service tax which it had already paid. Appeal disposed off. - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Atul Gupta, Chartered Accountant Assisted by Shri Varun Gaba, Advocate and Ms. Anmol Gupta, Chartered Accountant for the Appellant Shri Harsh Vardhan and Shri S K Meena, Authorize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Rs.) confirmed vide O-I-O 2,10,81,546/-(9529425+7595626+3956495) Interest As applicable under Section 75 of the Act Penalty Rs. 21,18,156/-(952943+759563+395650) under section 76 Rs. 10,000/- under Section 77 for SCN-III Service tax Appeals No. 52133,52134 52135 of 2022 Show Cause Notice Sr. No. SCN Date Period Service Tax(in Rs.) I 18.04.2016 2014-15 66,42,978/- II 05.04.2018 2015-16 2,52,80,070/- III 12.04.2019 2016-17 2017-18(upto June 2017) 7,11,62,890/- Order-in-Original 93-95/Commr/Delhi East/AP/2022 dated 22.06.2022 Service tax (Amount in Rs.) confirmed vide O-I-O 4,12,39,879/-(4,57,040+90,51,634+3,17,31,205) Period of Dispute 2014-15 to June- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 were decided by the Commissioner by Order in Original dated 22.6.2022 which is assailed in Service Tax Appeals no. 52133, 52134 and 52135 of 2022. 5. We have heard Shri Atul Gupta, Chartered Accountant assisted by Shri Varun Gaba, Advocate and Ms. Anmol Gupta, Chartered Accountant learned authorized representatives of the appellant and Shri Harsh Vardhan and Shri S K Meena learned authorized representatives for the Revenue and perused the records. 6. The undisputed fact of the contracts involved in all these appeals is that they were composite works contracts involving rendering the service and also a transfer or a deemed transfer of property in the material used in executing the works contracts. From 1994 up to 2012, service tax could be levied only on such services as were covered under various clauses of section 65(105). 7. Initially, under Chapter V of the Finance Act, 1994, few services were taxable and the list expanded from time to time. Whenever rendering the service also involved use of goods resulting in transfer or deemed transfer of property in the goods, abatement towards the cost of the material was provided through various notifications. From 1.6.2007, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DMRC Shahdara 2005-2006 341501 Commercial or industrial Construction Service yes 2 MP warehousing Logistics Corp, Bhopal for construction of Godown 2005-2008 585194 Commercial or industrial Construction Service yes 3 Karnataka State small Indl. Dev. Corp. Ltd. 2008-2010 4939166 Commercial or industrial Construction Service yes 4 Nuclear Power Corporation 2006-07 187556 Commercial or industrial Construction Service yes 5 DDA Shastri park-construction of Barat Ghar 2005-2007 85208 Commercial or industrial Construction Service yes 6 Engineers India Ltd.(IT Building) 2007-2010 10891019 Commercial or industrial Construction Service ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it demanded an amount of Rs.2,40,39,604/-of which only Rs.75,95,626/- has now been confirmed in the impugned order. Rest of the demand is not in dispute. (iii) SCN dated 17.04.2015 covering the period 2013-14 and it demanded an amount of Rs.63,11,706/-of which only Rs.39,56,495/- has now been confirmed in the impugned order. Rest of the demand is not in dispute. 13. The contracts which pertain to these confirmed demands in the three SCNs covered by this appeal are as follows: Appeal No. ST/52211/2016(2011-12 to 2013-14) A. SCN 23.10.2012(2011-12) Contract/Project Period involved Demand of service Tax Classification as per O-I-O Composite or not 1 MCD(improvement of drainage system and roads by ready mix concrete in ward 47 48 in the west Zone) 2011-12 1094199 Management, Maintenance and repair service yes 2 NBCC Chankyapuri(External Site Development work at Netaji Nagar Moti bagh) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service tax was paid by the Service recipient (HSIIDC) The appellant has not submitted complete details of contract. No proof of payment has been submitted before adjudicating authority. Total 75,95,626 C. SCN 17.04.2015(2013-14) Contract/Project Period involved Demand of service Tax Classification as per O-i-O Composite or not Exemption claimed by the Appellant Remark/ Department submission 1 NBCC Rohatak (Construction of Mini auditorium at Maharishi Dayanand University Rohatak) 2013-14 3263251 Commercial or industrial Construction Service/works Contract service yes 12( C) 12(a)of 25/2012 The auditorium can be used for extra-curricular activities, educational seminars as well as for commercial purpose 2 EIL (Renovation of Ayakar Bhawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for educational purposes. (ii) The adjudicating authority, however, denied the exemption on the ground that the Circular dated 17.09.2004 was withdrawn by Circular No. 96/7/2007 dated 23.08.2007 and no further circulars were issued validating the previous provisions has been issued in this regard. He also held that the auditorium can be used for extra-curricular activities, educational seminars as well as commercial purposes which is an assumption/ presumption without any basis. (iii) Service tax under section 65(105) (zzzza) can be charged only if it falls within its scope. The explanation to this clause makes it amply clear that construction of a building or structure would fall under this clause only if it is meant for commercial purposes. This explanation reads as follows: Works contract , for the purposes of section 65(105)(zzzza), means a contract wherein,- (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 (11) G.S.T.L. 169 (Tri. -Del.) 2. KMV Projects Ltd. Vs. Commissioner of C. Ex. S.T., Hyderabad 2019 (27) G.S.T.L. 388 (Tri. Hyd.) 3. SRM Engineering Construction Ltd. Vs. Commissioner of S.T., Chennai II 2018 (11) G.S.T.L. 174 (Tri. Chennai) 4. Banna Ram Choudhary Vs. Commissioner of Central Excise, Jaipur 2017 (3) G.S.T.L. 338 5. Commissioner of Service Tax, New Delhi Vs. N.S. Associates Pvt. Ltd. 2018 (11) G.S.T.L. 332 (Tri. Del.) 17. Learned authorised representative for the Revenue reiterated the impugned order. 18. We have considered the submissions on both sides with respect to this part of the demand. 19. For the period from 1.6.2007 up to 2012, works contracts could be taxed only if they fell under clause 65 (105)(zzzza) and only under this clause. The scope of this clause was limited and it did not include all composite works contracts involving supply or deemed supply of goods and rendering services but only some such services. Insofar as the construction of a building or structure is concerned, this clause applies to findings for commercial purposes. We do not agree with the contention of the Revenue that the auditorium construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 67% in terms of notification 1/2006. ii. It has been wrongly held by the adjudicating authority that the Appellant has not provided any document with respect to payment of local taxes i.e., VAT, though, it has not been disputed by the adjudicating authority that the Services provided are Works Contract Service. Further, it is to be noted that there is no such condition in notification 1/2006 to provide documentary proof with respect to payment of VAT or payment of local taxes. The only requirement to avail the benefit of the notification was that The gross amount charged shall include the value of goods and materials supplied or provided or used for providing the taxable service by the service provider. iii. The Appendix I of the agreement entered for this project very specifically shows that the material was used in the execution of the project. Moreover, Schedule B of the agreement shows the Free of Cost Material provided to the Appellant, which was consumed at the time of provision of construction itself. iv. The notification has been wrongly interpreted by the adjudicating authority. Further, the Free of Cost Material is not to be included in the gross va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract/ Project Period involved Demand of service Tax Classification as per O-i-O Composite or not Exemption claimed by the Appellant 1 NBCC Chankyapuri (External Site Development work at Netaji Nagar Moti bagh) 2012-13 3776903 Management,Maintenance and repair service yes Sr. No. 12 13 of Notification No.25/2012 2 NBCC Rohatak (Construction of Mini auditorium at Maharishi Dayanand University Rohatak) 2012-13 3494547 Commercial or industrial Construction Service/works Contract service yes 12( C) 12(a)of 25/2012 3 HSIIDC (Construction of flatted factories at Sonepat provided to Haryana State and Infrastructure Development corporation Ltd.) 2012-13 324176 Commercial or industrial Construction Service yes Service tax was paid by the Service recipient(HSIID ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inister appointed by President. This is also clarified vide CBEC in Taxation of Services: An Education Guide issued on 20 June 2012.The relevant extract of Education Guide is reproduced as under - 4.1.5 What entities are then covered under Government ? Government would include various departments and offices of the Central or State Government or the U.T. Administrations which carry out their functions in the name and by order of the President of India or the Governor of a State. f. Also, the work done by the Appellant includes horticulture also which is covered under the term Agriculture as clarified in CBEC in Taxation of Services: An Education Guide and the same is not taxable under service tax as per Section 66D(d) of the Act. The relevant extract is reproduced verbatim as under - 4.4.2 Are activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry included in the definition of agriculture? Yes. These activities are included in the definition of agriculture. 29. Learned authorised representative reiterated the findings of the impugned order. 30. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this contract cannot be sustained and hence needs to be set aside. 33. The last contract in this SCN pertains to the Construction of Flatted Factories at Sonepat for HSIIDC. The total demand Confirmed is Rs. 4,01,195/- (Period 2012 13 to 2013 14). 34. Learned consultant for the appellant submitted as follows: The Appellant entered into a contract with HSIIDC (Haryana State Industrial and Infrastructure Development Corporation) for construction of flatted factories at Sonipat Haryana. That the Appellant submits that the said project was taxable under the category of Works Contract Services, however, the Ld. Adjudicating Authority has demanded service tax under the category of Construction of Industrial Construction service which is wrong as the contract involves supply of material as well as service component. Moreover, in the said contract, it was mutually agreed between the parties that applicable service tax would be discharged by the Service Recipient i.e., HSIIDC for the contract under dispute. Further, the Ld. Adjudicating Authority has held that no documentary evidence has been provided regarding payment of tax. Though, a certificate to affirm that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 (h) of the same notification, the appellant as a sub-contractor of EIL will get exempted. Therefore, no demand of service tax can be sustained on the services rendered in this contract. Service tax Appeal No. 52133 of 2022 42. This appeal assails the following demands made under the statement of demand (SCN) and confirmed by the impugned order: ST/52133/2022 SCN 12.04.2019 (2016-17 to 2017-18 (upto June,2017) S.No. Contract/Project Period involved Demand of service Tax in Rs. Classification as per O-i-O Exemption claimed by the Appellant 1 NBCC India Kidwai Nagar(External Development work around social infrastructure area at Kidwai Nagar(East)) April,2016 to June- 17 2531412 Commercial or industrial Construction Service/works Contract service 12A( a) or12(a), 12(e) 29(h)of 25/2012 2 NBCC India SEZ Noida(renovation of SDF blocks A,B C, first floor of service center building provision of a record room, renovat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kalpana Chawla Government Medical College, Karnal on a contract received from HSCC India Ltd. The case of the appellant is that this construction is covered by notification no. 30/2012 issued under section 68 of the Finance Act according to which only 50% of the Service tax has to be paid by the service provider and the remaining 50% has to be provided by the service recipient. The appellant has already paid the service tax to the extent of 50%. Therefore, no demand of service tax needs to be paid. The Commissioner has, in the impugned order, held that Service tax is a value added tax and is leviable on the service provider except under certain circumstances, where the onus to pay service tax has been cast upon the service recipient. In the present case, by virtue of the service being rendered by the Appellant, they were liable to pay service tax in terms of provisions of Section 68. However, he did not record any findings on the question if the appellant s case was covered by notification no. 30/2012-ST and hence only 50% service tax has to be paid or if it is not covered, why. We, therefore, find that this matter also must be remanded to the Commissioner to examine and decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of HSCC in Kalpana Chawla Government Medical college is concerned, there is no finding on the appellant s submission that it is covered by notification no. 30/2012-ST and hence as service provider, had to pay only 50% of the service tax which it has already paid. Therefore, this matter also needs to be remanded to the Commissioner. The demand at S.No (4) is on an amount which the appellant claims to have received from CPWD not for any service which it rendered but as an award in an arbitration proceedings. This contention was not accepted by the Commissioner on the ground that the appellant had not produced any evidence. Such a decision is not sustainable because it is for the department to prove that the appellant had received consideration for a service and it is not open to the department to charge service tax on any amount received by the assessee if it cannot establish that the amount was received as a consideration for a service which it had rendered. Therefore, the demand on this ground needs to be set aside. The demand at S.No. (5) is on the basis that as per Form 26AS of the appellant, it had received some amounts. Unless the amounts so received are a consideration for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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