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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 ..... on 78 & Rs. 10,000/- under section 77) CESTAT Final Order 09.02.2017 disposed the Appeals filed by the Department and the assessee. Department's Appeal was dismissed and appeal filed by the assessee was allowed by way of remand. 2nd Order-in-Original 36/AP/Commr/2021 dated 12.10.2021 Period of Dispute 2005-06 to 2010-11 Service tax (Amount in Rs.) confirmed vide 2nd O-I-O 3,67,98,828/- Interest As applicable under Section 75 of the Act Penalty Rs. 3,67,98,828/- under section 78 & Rs. 10,000/- under Section 77 of the Finance Act, 1994 Issue Non-payment of service tax on "construction Services Service Tax Appeal No. 52211 of 2016 Show Cause Notice Sr.No. SCN Date period Service Tax(in Rs.) I 23.10.2012 2011-12 3,57,56,467/- II 21.05.2014 2012-13 2,40,39,604/- III 17.04.2015 2013-14 63,11,706/- Order-in-Original DLISVTAX001COM0261516 dated 29.02.2016 Period of Dispute 2011-12 to 2013-14 Service tax (Amount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is de-novo order. 3. After the SCN dated 21.4.2011, six periodical SCNs were issued. Three of these SCNs dated 23.10.2012, 21.5.2014 and 17.4.2015 were decided by the Commissioner by Order in Original dated 29.2.2016 which is assailed in Service Tax Appeal no. 52211 of 2016. 4. Three more SCNs dated 18.4.2016, 5.4.2018 and 12.4.2019 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 Chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: Appeal No. ST/50097/2022(2005-06 to 2010-11) Sr. No. Contract/Project Period involved Demand of service Tax in Rs. Classification as per O-i-O Composite or not 1 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 yes 7 HPCL-Construction of Dwelling units for HPCL cooperative Group Housing Society, Greater Noida 2005-2008 7638812 Construction of complex Service yes 8 DDA LIG Houses Rohini 2005-06 105532 Construction of complex Service yes 9 Huda Employees Welfare Organization housing flats Panchkula 2005-2006 115017 Construction of complex S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC Rohatak(Construction of Mini auditorium at Maharishi Dayanand University Rohatak) 2011-12 1035642 Commercial or industrial Construction Service/Works contract service yes 4 EIL(Renovation of Ayakar Bhawan Vaishali, ghaziabad) 2011-12 78756 Commercial or industrial Construction Service yes 5 NTPC/APCPL Jharli(Construction of Security Barracks and 10 B-Type quarters at Jharli for IGSTPP) 2011-12 213166 Commercial or industrial Construction Service/Works Contract service yes Total 95,29,425 B. SCN 21.05.2014 (2012-13) 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 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 The auditorium can be used for extra-curricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and University Rohatak);and B) NTPC/APCPL Jharli(Construction of Security Barracks and 10 B-Type quarters at Jharli for IGSTPP). 15. Services of construction of a mini auditorium at the Maharshi Dayanand University (MDU), Rohtak were covered in this SCN as well as the next SCN dated 21.5.2014. This contract was executed during the period 2011-12 to 2013-14 and demands were raised in these two SCNs for different periods 16. Learned consultant made the following submissions with respect to this contract. (i) The appellant constructed a mini auditorium at MDU, Rohtak as a composite works contract. These services were exempted in view of circular No. 80/10/2004 - S.T., dated 17.09.2004 being the services provided to educational institution, and cannot be considered for commercial purpose as pre-dominantly used 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 activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o June 2017) for the same contract the department has provided abatement of 60%, but in the present case, it has provided 40% abatement. (vii) During the post negative list period, the construction of structure meant predominantly for use as educational institution is exempt vide entry 12 (C) of Notification No. 25/2012 dated 20.06.2012. (viii) Further, entry 12 (a) also provides for exemption for the construction services provided to Government, a local authority or a Government Authority. The MDU, Rohtak, initially established as Rohtak University, came into existence by an Act No. 25 of 1975 of the Haryana Legislative Assembly in 1976 and thus, covered under Government Authority. (ix) Reliance is placed on: - 1. Vij Construction Pvt. Ltd. Vs. Commissioner of C. Ex., New Delhi - 2018 (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 V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the auditorium in MDU is exempted during after 2012 also. 22. Therefore, the demand of service tax on this contract deserves to be set aside. NTPC/APCPL Jharli(Construction of Security Barracks and 10 B-Type quarters at Jharli for IGSTPP) 23. Learned consultant does not dispute the taxability of the services rendered under this contract but asserts that in the course of rendering the services, materials were also used and therefore, this was a works contract service and therefore, abatement towards the cost of materials must be given to it. He made the following submissions: i. The Appellant duly paid the Service Tax after availing the benefit of Notification 1/2006 dated 01.03.2006. The Appellant paid the tax at 33% of the Gross value after availing abatement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authorities to take action. If it was exempted, of course, the appellant does not have to pay it. Under no circumstances can the service tax be levied on the value of the goods transferred. In case of indivisible works contracts where abatement is available towards the value of the goods used, such abatement cannot be denied on the ground that there is no evidence that VAT has been paid. We, therefore, find that the appellant was liable to pay service tax after abatement on the services rendered under this contract. SCN dated 21.05.2014 27. The second SCN in this appeal dated 21.5.2014 demanded service tax on the services rendered under three contracts as under. SCN 21.05.2014(2012-13) 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 Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of various Central Ministries, state governments and other nodal authorities. Thus, MoUD is aptly covered under the scope of Government as it is a part of central government and headed by a union minister 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 defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. 12A (a) of the notification at the hands of the NBCC. The appellant, as a sub-contractor of NBCC will also be exempt by virtue of S.No. 29(h) of the notification. The demand under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is Income Tax building and it squarely falls under this definition. Therefore, EIL, as a contractor, will get exemption under S. No. 12A. Further, as per S.No. 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, renovation of exterior works of service center and replacement of lift of SDF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 decide. 46. We, therefore, find that in this appeal, 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 Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted 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 taxable service rendered, no service tax can be levied. Therefore, the demand needs to be set aside. 50. The demands confirmed in the impugned order insofar as this appeal is concerned therefore, need to be set aside except insofar as the demand on contract with HSSC is concerned, which matter must be remanded. 51. In view of the above, the five appeals are disposed of as below: a) Service Tax Appeal No. 50097/2022 is allowed and the impugned order is set aside. b) Service Tax Appeal No. 52211/2016 is partly allowed and the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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