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TMI Blog2024 (12) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... axable service under the works contract services (hereinafter referred as WCS). During the audit of service tax records of Airport Authority of India (hereinafter referred as AAI), it was observed that the appellant had provided services to AAI more than the threshold limit but the appellant has not paid the service tax on the amount received for providing the said services. Observing this fact several documents were called from the appellant as that of balance sheet, profit and loss account agreements/work orders, income tax returns, TDS, ST-3 returns etc. The documents were provided by appellant vide their letter dated 3.10.2011 with the mention that the appellants have not charged any service tax to AAI. They are rather covered under the general exemption of Notification No. 42/2010 dated 28.6.2010. 3. From the perusal of the work orders, department observed that the appellant had entered into annual rate contract for repair and maintenance of civil work. As such they were providing the maintenance and repair services and not the WCS. No exemption is available for providing maintenance and repair services not even in Notification No. 24/2009 dated 27.7.2009. It is, therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he definition of works contract services excludes services provided to governmental authorities hence the services provided to CPWD are out of the scope of taxability. The demand has been confirmed including the value of goods involved in rendering the services which amounts to travelling beyond the scope of statutory provision of law. Similarly error has been committed while invoking the extended beyond the period of five years. Since there was no liability of the appellant to pay service tax in light of the Notifications No. 42/2010 dated 28.6.2010 and 54/2009 dated 27.7.2009. Nil returns were rightly filed. 5.2 Learned counsel has relied upon the decision in the case of Shubham Electricals Vs. Commissioner of C. Exc. & ST, Rohtak - 2015 (40) STR 1034 (Tri.-Del.) and The Principal Commissioner, Service Tax, Delhi Vs. Shubham Electricals - 2016 (5) TMI 1055- Delhi High Court to impress upon that the demand cannot be confirmed based on vague show cause notice. Also relied upon in the case of M/s Jyoti Sarup Mittal Vs. Commissioner of Central Tax, GST, Delhi-East - 2024 (1) TMI 334- CESTAT, New Delhi, Agarwal Engineering Works Vs. CC, C. Ex. & ST, Hyderabad-IV - 2019 (24) GSTL 264 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b)and (c) ; or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects." "Management, Maintenance or Repair Services as defined under Section 65(64) of the Finance Act, 1994 reads as under: With effect from 16.06.2005 "Maintenance or Repair" means any service provided by - (i) Any person under a contract or an agreement; or (ii) A manufacturer or any person authorized by him, In relation to; (a) Maintenance or repair including reconditioning or restoration or servicing of any goods or equipment, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed manner. We have also seen that Rule 2(A) of Service Tax Rules, 1994 framed pursuant to this has followed the second Gannon Dunkerley case reported in 1958 (9) STC 353 in segregating the 'service' component of a works contract from the 'goods' component. It begins by working downwards from the gross amount charged for the entire works contract and minusing from it the value of the property in goods transferred in the execution of such works contract. This is done by adopting the value that is adopted for the purpose of payment of VAT. The rule goes on to say that the service component of the works contract is to include the eight elements laid down in the second Gannon Dunkerley case including apportionment of the cost of establishment, other expenses and profit earned by the service provider as is relatable only to supply of labour and services. And, where value is not determined having regard to the aforesaid parameters, (namely, in those cases where the books of account of the contractor are not looked into for any reason) by determining in different works contract how much shall be the percentage of the total amount charged for the works contract, attributable to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03-ST dated 20.06.2003 which also exempts so much of the value of all taxable services, as is equal to the value of the goods and materials sold by the service provider to the recipient of service from the service tax leviable thereon under Section 66 of the Finance Act. Though as per department this circular is applicable if there is documentary proof specifically indicating the value of said goods or materials. But as already held above that in such case there shall be available the abatement of 67%. In any case the value of goods is not leviable to service tax. 15. The entire above discussion is sufficient for as to hold that the activity of the appellant rendered to AAI should be classified as Works Contract Service with effect from 1.6.2007. For the period i.e. from March 2006 to May 2007, the activity still cannot be called as Maintenance Management or Repair service. Though it could be Commercial or Industrial Construction Service as defined under Section 65(105) (zzq) of Finance Act, 1994, that too was not the service simpliciter, in the present case. 16. For calculating the service tax liability for composite contract services the value of goods involved has to be exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices provided to CPWD, we observe that CPWD works under Ministry of Urban Development, Government of India for developing civil structure of the country. It is denied to have any commercial purpose by the appellant i.e. CPWD doesn't work for commerce. The Hon'ble Apex Court in the case of Gannon Dunkerley & Co. Madras Ltd. Vs. State of Madras - 1954 (15) STC 216 (Mad.) has observed about trade and commerce in the following words: "Trade has been explained" to quote the passage where it was considered, "in the Concise Oxford Dictionary" 'as business, especially mechanical or mercantile employment opposed to profession carried on as means of livelihood or profit'. The meaning of 'commerce' as given by the same Dictionary is 'exchange of merchandise, especially on large scale'. In ordinary parlance, trade and commerce carry with them the idea of purchase and sale with a view to make profit. If a person buys goods with a view to sell them for profit, it is an ordinary case of trade. If the transactions are on a large scale it is called commerce. Nobody can define the volume of business, which would convert a trade into commerce. But everybody understands the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y been invoked by the department. The demand for the period 2006-07 to 2011-12 has wrongly been raised vide the show cause notices as mentioned above. We draw our support to the decision of Hon'ble Apex Court in the case of Anand Nishikawa Co. Ltd. Vs. CCE - 2005-TIOL-118-SC-CX, the Hon'ble Supreme Court held as under: "28. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. Vs. Collector of Central Excise, Bombay 1995 Suppl. (3) SCC 462, we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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