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TMI Blog2024 (8) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of any Design or Drawings services. Moreover, the consideration so paid was also for the provision of a gamut of services as described above, including design and drawings, and which were an integral part of the entire contract, incapable of being segregated or vivisected. The Revenue has also not brought any evidence on record nor has been able to establish before us that the design and Drawings covered within the scope of the Contract constituted an independent aim of the contractual arrangement between the contracting parties, and that the entire consideration described as 'Design Charges' paid by the Appellant was only for the provision/supply of Design and drawings - the attempt of the Revenue to artificially vivisect the supply of Design and Drawings from the above indivisible contract cannot be sustained, and the demand of service tax raised and confirmed on this basis cannot be upheld. The Department, however, failed to discharge this burden cast upon it in the present case. The SCN was vague, non-specific and void ab initio as it simultaneously alleged the classification and taxability of the said service under two specified table categories viz. Design Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural Steel Works' as per the specifications respectively. The sub-contracts entered into with the Appellant also involved the erection, installation and other associated works at the site. 4. The Appellant, in turn, placed a Purchase Order dated 30.04.2008 on M/s. Corus Building Systems Pvt. Ltd [M/s Corus]., Singapore for the supply of Kalzip Roofing System material required for the said DIAL Project (The name of M/s. Corus Building Systems Pvt. Ltd. was subsequently changed to ―Kalzip Asia Pvt. Ltd.). The purchase order awarded to M/s. Corus envisaged the scope of the Order as follows:- (a) Supply of Aluminium Kalzip straight sheets as per the specifications. (b) Supply of Aluminium flashing non-clad alloy, PVD F-2 Coat paint system as per the requirements. (c) Supply of Kalzip Bespoke Accessories (d) Design, Drawings, Detailing, Calculations, Test Certificates, and Submittals for roofing system (e) Providing technical support, supply of roll formers and technicians at site and roll forming charges. In pursuance of the Works Order placed on it, M/s. Corus supplied the material from time to time. M/s Corus also supplied, electronically, the Designs, Drawings, Calculatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Commercial and Industrial Construction services. He submitted that, assuming the liability on design charges paid by the Appellant under reverse charge, the Department was obliged in law to explicitly specify the taxable category under which the alleged services stated to have been availed from the foreign entities were classifiable and taxable and the basis or grounds in support thereof. It was not permissible in law for the Department to adopt the If I fail here, I may succeed there approach regarding the classification and the consequential demand based on it. He submitted as the SCN itself was ex-facie bad-in-law, the impugned order, confirming the demand on the design charges under reverse charge under the taxable category viz. Design Services is rendered illegal and unsustainable in law. The learned Advocate relied on the following judgments in support of his submissions:- 1. Shubham Electricals vs. CCE 2015 (40) S.T.R. 1034 (Tri-Delhi). [Affirmed in 2016 (42) S.T.R. J312 (Del.)]. 2. Balaji Contractor vs. CCE 2017 (52) S.T.R. 259 (Tri-Del). 7.2 The demand of service tax confirmed under the taxable category viz. Design services is illegal and without the authority of law as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lstom s case, holding that a service component in a composite contract of sale of goods and service could be subjected to levy of service tax stood overruled. 7.3 The learned Advocate further submitted that even if it is assumed, for the sake of argument, that the supply of designs, drawings, detailings, calculations, testing certificates, and submittals by M/s Corus involved a service, and that also, a taxable service, the same was not classifiable and taxable under the taxable category, viz., Design Services as defined vide Section 65 (36b) read with Section 65 (105) (zzzzd) of the Act, rendering the impugned order illegal and without the authority of law. Referring to the definition of Design Services given in Section 65 (36b), the learned Advocate submitted that the definition covered the service/activity in relation to designing of the specified products/intangibles, viz. furniture, consumer products, industrial products, packages, logos, graphics, websites and corporate identity designing and production of three-dimensional models; that the definition was exhaustive and not illustrative. He vehemently argued that the Kalzip Aluminium Roofing Sheets supplied by M/s. Corus were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mouflage any transaction with M/s Corus. The demand was raised on the basis of the information recorded in the books of accounts and which was provided by the Appellant itself. He lastly submitted that there was an inordinate and unexplained delay in the issue of the notice though all the material facts were within the knowledge of the Department as early as 2010 through EA-2000 audit. The learned Advocate also submitted that the allegation of suppression of facts with an intent to evade payment of service tax made by the SCN and the findings of the Commissioner upholding the same are devoid of any substance or merit, unsubstantiated, invalid and untenable in law. Consequently, the invocation of the extended period of limitation available under the proviso to Section 73(1) of the Act is illegal, unjustified and without the authority of law. The demand of service tax for the period F.Y. 2009-09 to 2009-10 raised by SCN dated 22.04.2014 and confirmed by the impugned order is, therefore, entirely barred by limitation and unsustainable in law. He relied upon the various judgements in support of these submissions. The learned Advocate, accordingly, prayed that the impugned order be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tals . We, thus, find that there was no provision or supply of any independent services of Design and Drawings by M/s. Corus to the Appellant in terms of the contract. The separate consideration in the form of foreign remittances paid by the Appellant to M/s. Corus was not only for any independent supply or provision of any Design or Drawings services. Moreover, the consideration so paid was also for the provision of a gamut of services as described above, including design and drawings, and which were an integral part of the entire contract, incapable of being segregated or vivisected. The Revenue has also not brought any evidence on record nor has been able to establish before us that the design and Drawings covered within the scope of the Contract constituted an independent aim of the contractual arrangement between the contracting parties, and that the entire consideration described as 'Design Charges' paid by the Appellant was only for the provision/supply of Design and drawings. 12. We, therefore, find that the attempt of the Revenue to artificially vivisect the supply of Design and Drawings from the above indivisible contract cannot be sustained, and the demand of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the demand in the present case related to the period F.Y. 2008-09 to March, 2010 and that is, for the period prior to the introduction of the 'Negative List based levy of Service Tax' regime introduced in July 01, 2012. During the relevant period, the service tax regime was governed by the 'Positive List based levy of Service Tax' and only that service could be brought within the scope of the levy which was covered by any of the sub-clauses of Section 65 (105) of the Act that defined the term 'taxable service'. We, therefore, find that the onus was on the Department to conclusively establish the classification of the services under dispute relating to Design and Drawings under a specified taxable category, even if its taxability was presumed. The Department, however, failed to discharge this burden cast upon it in the present case. We find that the SCN was vague, non-specific and void ab initio as it simultaneously alleged the classification and taxability of the said service under two specified table categories viz. Design Service and Commercial and Industrial Construction Service which was not permissible in law. 15.1 In C.C.Ex. vs. Brindavan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tri-Del), the Tribunal observed as follows:- 7 . We have heard both the sides and perused the appeal records. Admittedly, the show cause notices issued to the appellant sought to demand/recover Service Tax under the taxable category under Cargo Handling Services. The proposal was made after due examination of the scope of services rendered by the appellant. The same was confirmed by the original authority. On appeal, the first appellate authority examined the same scope of services, reclassified it under new categories of manpower supply and Goods Transportation Agency services. We note that the tax entry of each type of service has got legal implications with reference to tax liability, classification, quantification, exemption, abatement, etc. It is for this reason, the assessee should be put to notice about the correct classification under which the demand was sought to be made, so that defence can be made to reply for such allegation. Admittedly, in the case involved in the present proceeding, no such proposal to demand Service Tax in GTA services or manpower supply service has been made by the department. As such, the impugned order which travelled beyond the scope of show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor could be considered so. We, therefore, find that the services under dispute were outside the scope of the 'Design Services' as defined in Section 65 (36b) of the Act and demand of service tax confirmed under this taxable category is unjustified and unsustainable in law. We also find that the Commissioner justified the classification of the services under 'Design Services' by observing as follows at para 6.3 of the Order:- 6.3 .. However, I find that the party made a desperate attempt to debar classification of designing/drawing in relation to such fabrication and supply of Kalzip Aluminium roofing sheets and other specified items from the inclusive list of services defined under the definition of design services but they could not submit their explanation on the production of three dimensional models as detailed in the said definition. As I understand that for executing such a huge project like the DIAL one has to prepare a walk through or similar type of three dimensional model so as to make correct type of roofing sheet in the CKD condition for ease of transportation and assembly at site. Thus, the design of the project detailed in a three dimensional model an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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