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TMI Blog2023 (9) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of the goods and material in the total value for the purpose of charging of service tax on the service rendered by the appellant - HELD THAT:- In the case of Safety Retreading Private Limited Vs. Commissioner of C.Ex. Salem [ 2017 (1) TMI 1110 - SUPREME COURT] , the Hon ble apex court has held that the benefit of Notification No.12/2003-ST is available under Maintenance and Repair service In this case, the Hon ble Apex Court has held that the value of the materials used in the retreading of the tyres has to be excluded from the value of the service provided and only service tax can be levied on the service portion of the total activity of re-treading. The period involved in this case is 2006-07 to 2010-11. However, the invoices were raised between 16.12.2008 to 25.01.2011. Service tax on works contract was introduced w.e.f. 01.06.2007. The demand has been raised under the category of Commercial or Industrial Construction Service after the introduction of Works Contract as a service under clause (zzzza) of section 65(105) of Finance Act, 1994. The appellant has also taken the plea that classification of the service under Commercial or Industrial Construction Service is not corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.06.2003; since VAT is not shown in the invoice, benefit of Notification No. 12/2003-ST dated 20.06.2003 is not available; Circular No. 233/2/2003-CX dated 03.03.2006 has clarified that the intention of Notification 12/2003-ST is to give benefit of value of the goods sold subject to documentary evidence of such sale, if the goods are consumed during the provision of service, benefit of Notification is not available; in this case goods are consumed during the provision of service, hence of benefit of Notification No. 12/2003-ST is not available; the appellants have sold goods for Rs. 11.42 Crores and the same was again received back from the client and value of such goods is not included in the value for the purpose of paying service tax; further, there is a shortfall in the payment of interest amount to the tune of Rs. 2,67,957/-, for the period October 2007 to July 2010. 4. The appellant contends that they have filed detailed reply and produced evidences sufficient to get the benefit of Notification No. 12/2003-ST; they also objected to adding the high sea sales worth Rs. 41.42 Crores. 5. The learned Commissioner in his findings has held that; the benefit of Notification No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period 2008 to January 2011 and has been issued under "Commercial or Industrial Construction Service", which is not permitted under law as held by CESTAT in the case of Ajit India Pvt. Ltd. Vs. Commissioner - 2018 (19) G.S.T.L. 659 (Tri.-Mum.), which has been upheld by Hon'ble Supreme Court in- 2020 (8) CENTAX 152 (SC), though they continued to pay service tax under "Commercial or Industrial Construction Service", Department should have disputed the classification; the appellant while replying to the show-cause notice has stated that the service falls under "Works Contract", which was also acknowledged in the Order-in-Original in the findings at Para 45. Based on the above decision of the Hon'ble Supreme Court the show-cause notice as well as Order - in- Original is liable to be set aside. 10. The appellant further submits that they are registered under "Commercial or Industrial Construction Service" and during the period December 2008 to 2011, they have used materials like cement, steel, electrical equipment, elevators and other construction material for the construction of IT Park; generally the material portion in construction service will be in the range of 60 to 70% and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, Kerala Vs.Tara Agencies - 2007 (214) E.L.T. 491 (SC) 13. The appellant further submits that; the learned Commissioner held that Notification No. 12/2003-ST is not applicable for materials involved in deemed sale, which means if there is a trading activity only for such cases the Notification is applicable; the finding of the Commissioner is beyond the scope of the show-cause notice inasmuch as the Notification provides for the benefit of sale of materials and there is no need to provide any such notification as supply of service will never involve traded goods; therefore, the intention of the law is to provide benefit of the sale of materials only in respect of deemed sale involved in construction, works contract, repairs and maintenance and installation and commissioning, etc.; further during the relevant period only Notification Nos. 12/2003-ST 20.06.2003 and 01/2006-ST 01.03.2006 only are available for construction service. Notification No. 01/2006-ST was available to the construction service subject to condition that no input tax credit can be taken on materials and services and also nonavailment of benefit of Notification No. 12/2003-ST dated 20.06.2006. Hence, the choice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it wrongly shown under the column meant for materials is Rs. 16,46,880/- during two-half yearly returns for October 2008 to March 2009 and April 2009 to September 2009; hence, if they have taken credit on inputs, the credit would have been in crores. 16. The appellant as regards the demand of interest of Rs. 2,97,871/-, it is their submission that they have paid excess interest amount and intimated the Department, however, instead of appropriating this amount, the same has been confirmed. Hence, they submit that this demand may be dropped. 17. The appellant submits that; as regards the extended period, the issue involved is of interpretation of allowing the benefit of Notification No. 12/2003-ST, they rely on the decision of the Hon'ble Supreme Court in the case of Uniflex Cables Vs. CCE- 2011-TIOL-85-SC-CX, wherein it is held that penalty cannot be levied in cases of interpretative nature; similar judgment was given in the case of CST Vs. Vijaya Television Pvt. Ltd. 2015- TIOL-874-HC-MAD.-ST. Hence, extended period should not be invoked and penalty imposed. Further they are regular in filing the returns and paying the applicable taxes and all the disputed transactions were shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no requirement under the Notification No. 12/2003-ST to mention the fact of payment of value added tax (VAT). They have contended that they have mentioned the value of the material and services separately in the invoices. They also produced the records of payment of Value Added Tax and they have submitted the copies of the VAT returns filed to the State Government. They have contended that they have used the formula of 60% to 40% and paid service tax on 40% component towards the services rendered. It is their case that the notification available to them is Notification No. 12/2003-ST and 1/2006-ST at the relevant period and they have chosen to avail the benefit of Notification No. 12/2003-ST dated 20.06.2003, wherein they have fulfilled the conditions stipulated in the notification. As regards the availment of cenvat credit, they have submitted that they have not availed cenvat credit on the inputs and input services involved in providing of the construction services. However, inadvertently in the service tax returns, they have inadvertently shown availment of cenvat credit of ₹16,46,880/- and this has not been verified by the authorities. As regards the reliance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law No. 2, which already stands concluded while dealing with the question of law No. 1, is also answered in favour of the assessee and it is held that the term 'sale' appearing in exemption Notification No. 12/2003-S.T., dated 20-6-2003 would also include "deemed sale" as defined by Article 366(29A)(b) of the Constitution. " 23. In the impugned order the the learned authority has held that the Notification No. 12/2003-ST does not cover "deemed sale" and hence the goods, which are involved in the service of construction are not sold since they didn't find a mention in the invoices and it can be taken as deemed sale, which is not covered in the notification. The appellant contended that the requirement of mentioning of payment of VAT in the invoice is not required even if it is considered as a deemed sale. The learned authority has held that deemed sale is not covered in the Notification No. 12/2003-ST. However, we find that the Hon'ble High Court of Madhya Pradesh in the case of M/s. Agarwal Color Advance Photo Systems has categorically held that the word "sale" in Notification No. 12/2003-ST covers both "sale" and "deemed sale". 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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