9911796707
TMI Blog2024 (1) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... ection to the Adjudicating Authority to verify and scrutinize documents furnished by the appellant with regard to their claim of abatement in spite of such directions, the Adjudicating Authority has denied the benefit of abatement with observing that appellant has not produced details of site-wise/ bill-wise for the purchase of materials. This observation is highly erroneous and not acceptable. The Tribunal while analyzing a similar situation in the case of M/S. OCEAN INTERIOR LIMITED VERSUS COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI [ 2019 (11) TMI 124 - CESTAT CHENNAI ] observed that when there is sufficient evidence to establish that the appellant has purchased materials for execution of work and also paid VAT on such goods, the department cannot deny abatement and demand service tax on entire gross amount received. In the present case also, the appellant has produced VAT returns to show that they have paid VAT on the materials used in the execution of work orders. Similarly in the case of M/S RAJ INTER DECOR PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, AND SERVICE TAX, DELHI-III [ 2023 (7) TMI 1180 - CESTAT CHANDIGARH ] the Tribunal while considering the eligibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sold by the service provider to the recipient of service subject to the condition that there is documentary proof for the value of materials and goods used. The appellant failed to produce documentary evidence and did not maintain any site wise/ bill wise records of purchase and sale. The appellant then has to pay service tax on the entire amount collected from the client without availing abatement. Show cause notice dated 04.07.2013 was issued to the appellant for the period April 2008 to June 2012 proposing to demand the differential service tax along with interest and for imposing penalties. 1.1 After due process of law, the original authority vide OIO No. VAD-EXCUS-001-COM-10-13-14 dated 04.10.2013 confirmed the demand, interest and imposed penalties. Against such order the appellant had earlier filed Appeal No. ST/13894/2013 before the Tribunal raising the ground that though enough documentary evidences were produced by the appellant to show that goods and materials were purchased and used in executing the works, the adjudicating authority failed to consider these evidences and thus has wrongly rejected the claim of abatement. The Tribunal vide Final Order No. A/11167/2014 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not in dispute in the present proceedings. The work undertaken by the Appellant is a composite work involving Service and material. In fact, approx. 78-80% of total contract value consists of the material purchase value itself, while balance 20-30% value composes of labour charges and profit of the Appellant. The Appellant had paid VAT on the material component and the same is not under dispute. It is asserted that the impugned order itself do not dispute that the present contracts are composite, and there is no question of levying Service Tax on the entire value of the contract, which obviously include substantial value for goods for which the Appellant has paid applicable VAT. After 01.06.2007, these transactions can be taxed only under the category of Works Contract Service wherein the appellant had an option to pay service tax @ 2% under Works Contract Composition Scheme as well. 2.2 Learned Counsel further argued that the issue on hand is squarely covered in favour of the Appellant vide the decision in the case of Ms. Ceran Interior Limited 2019 (11) TMI 124-CESTAT Chennai as upheld by Hon'ble Apex Court as reported at 2023(9) TMI 818-SC, wherein under absolutely identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams; From the above definition it can be seen that construction activity for the purpose of repair, alteration, renovation or restoration and such other services would be eligible for abatement as it falls under sub-clause (d) of the definition. So also construction of pipelines or conduit falls under sub-clause (b) of the definition. 5.1 Learned Counsel invited our attention to the sample work orders included in the appeal paper book. Work order dated 15.01.2009 is as under:- Another work order dated 16.03.2008 is as under:- The work order dated 15.01.2009 is as under 5.2 From the above samples it is very much clear that the appellant has used goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r claim of abatement in spite of such directions, the Adjudicating Authority has denied the benefit of abatement with observing that appellant has not produced details of site-wise/ bill-wise for the purchase of materials. We find that this observation is highly erroneous and not acceptable. 5.4 The Tribunal while analyzing a similar situation in the case of Ocean Interior Limited 2019 (11) TMI 124 CESTAT CHENNAI observed that when there is sufficient evidence to establish that the appellant has purchased materials for execution of work and also paid VAT on such goods, the department cannot deny abatement and demand service tax on entire gross amount received. In the present case also, the appellant has produced VAT returns to show that they have paid VAT on the materials used in the execution of work orders. The relevant paragraphs in the case reads as under:- 1.2 During the course of audit, it was noticed that the appellants had not discharged Service Tax on the gross amount received for completion and finishing services provided to their clients. The Department was of the view that the appellants failed to include the value of materials consumed by them while providing the finis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f materials/goods that have been used and sold in execution of the contract. 8.2 The Tribunal in the case of M/s. Singh Sales and Services Vs. Commr. of Cus., C.Ex. S.T., Allahabad reported in 2017 (52) S.T.R. 38 (Tri. Allahabad) has held that value of goods/spare parts supplied and used for providing service are not includible in the taxable value. 8.3 In M/s. Sobha Developers Ltd. Vs. Commissioner of C.Ex. S.Tax, Bangalore reported in 2010 (19) S.T.R. 75 (Tri. Bang.) it was held that the material value sought to be included on the ground that goods are consumed in provision of service and not sold, cannot sustain. 9. After appreciating the facts and following the decisions cited above, we are of the considered opinion that the appellant has correctly discharged Service Tax on the service portion. The demands therefore cannot sustain. 10. The impugned order is set aside. The said decision of the Tribunal was confirmed by the Hon ble Supreme Court and the appeal filed by department was dismissed as reported in 2023 (9) TMI 818(SC). 5.5 Similarly in the case of Raj Inter D cor Private Limited 2023 (7) TMI 1180 CESTAT Chandigarh the Tribunal while considering the eligibility of abate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e availed of the abatement only after producing the documentary evidence. She stated that there is actually no documentary evidence for the abatement claimed. This 30% : 70% appears to be arbitrary. In this view of the above, she requested the Bench to uphold the order of the Commissioner of Service Tax. 8 . On a very careful consideration of the fact, we find that there is no dispute with regard to the leviability of service tax on the maintenance and repair services. The main point of dispute is with regard to the valuation. However, Section 67 of the Finance Act clearly provides for the abatement of the value of the goods sold in the course of the carrying out of the service. The point is whether the goods are actually sold. According to the department, the contract is only for the maintenance and repair. Therefore, it cannot be said that the spare parts were sold. This view is not correct. The chartered accountant has actually given a certificate with regard to the consumption of materials. It is also not denied that in the course of the maintenance no material was used. In several decisions it has been held that service tax cannot be levied on that portion of the value on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
