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TMI Blog2025 (2) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexure-2 to the agreement for covered warehouses that it has got no utility without the facilities like turning radius suitable for 40 feet trailers, land being not low lying and free from flooding, inundation, fencing all around the premises up to 4 feet height, entrance and exit gates on the main road side, etc. Therefore, the area under covered warehouses can be accessed and optionally utilized only with these facilities when the vacant land is also used in conjunction with the closed warehouse. Interestingly, the agreement is for covered warehouse approximately measuring 20,000 Sq Meter subject to certain conditions - a conjoint reading of the terms and conditions of these two agreements would show that the vacant land for which separate agreement has been entered into is nothing but land appurtenant thereto to the covered area/shed/warehouse. They are closely interlinked and interdependent. Thus, by relying on the definition of RIPS under section 65(105)(zzzz), the vacant land has to be considered as land appurtenant to the warehouses. Therefore, we do not find any infirmity in the impugned order confirming the demand on this count. Demand on account of vacant land at A9 Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Adjudicating Authority has clearly held that the appellants have let out only the vacant land appurtenant to the building and not the building and therefore, liable for exclusion from the definition of 'immovable property' under section 65(105)(zzzz) of the Finance Act, 1994. Merely because he was unable to exclude the income arising out of this property, no relief was given, which is not correct. The appellants are at liberty to show them the breakup of rents received from M/s ATR Cars and the Service Tax liability which has been included in the total liability needs to be excluded for the purpose of calculating the demand. Therefore, this also needs to be remanded back. Non-payment of Service Tax during the period May, 2009 to Feb, 2010 - HELD THAT:- There is no doubt about the classification or the valuation and the only dispute is as regards amount payable and paid. As per the appellant, the entire Service Tax liability was discharged except for the interest liability on the delayed payment but the same was not accepted in view of the fact that appellant has not included rent received for the open land and that certain documents were also not submitted. Since the issue as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be remanded back to the Original Adjudicating Authority for recalculation. Commercial of Industrial Construction Service - HELD THAT:- The Adjudicating Authority has not considered the abatement claimed by the appellant for calculating the total Service Tax liability while paying certain Tax liability under this category. The appellants could not put forth any evidence to claim having fulfilled the conditions for availing the benefit under Notification No.01/2006-ST dt.01.03.2006 and therefore, the same was denied by the Adjudicating Authority. Here, it is again felt that proper opportunities were not given to the appellant to adduce evidence in support of their claim for abatement in terms of Notification No.01/2006-ST. Therefore, this issue is also remanded back to the Original Adjudicating Authority for recalculation of Service Tax liability. Time limitation - suppression of facts or not - HELD THAT:- The appellants have not canvassed any concrete reasons as to why the extended period should not be invoked in the factual matrix of this appeal. In fact, they have although been claiming that the demand itself is not maintainable on merit. They have also taken a plea from time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SFCS for the period 01.06.2007 to 31.03.2011 and also imposed penalty of Rs.4,16,97,859/- in respect of these services and violations apart from appropriating certain amount already paid by the appellant in respect of SFCS. 3. The case of the department was that the appellants have entered into various agreements with some of their clients for renting out warehouses, as also open land. The department felt that in view of the topography and plot layout, the open land is nothing but land appurtenant to the covered shed/ warehouses rented out to their clients. Therefore, in view of explanation (1) to the definition of 'Renting of Immovable Property' under Section 65(105)(zzzz), the 'immovable property' also includes various other lands, which are either appurtenant or are incidental to use of such building or part of a building. However, the same does not include, inter alia, vacant land whether or not having facilities clearly incidental to the use of such vacant land. For ease of reference, the definition is cited below:- " (105) "taxable service" means any service provided or to be provided,- (zzzz) to any person, by any other person, by renting of immovable property or any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of explanation (1)(iv). This is evident from the map submitted by the appellant, wherein, it is seen that said vacant industrial land is surrounded by several industrial establishments and hence, it is part of industrial estate. He has also submitted that said vacant land is given on lease for construction of temporary structures at a later stage to be used for furtherance of business as covered under section 65(105)(zzzz) by virtue of explanation (1)(v). This is obvious from the appellant's agreement with their tenant, where it was provided that tenant shall be entitled at its own cost to install furniture and fixtures to the property as may be required by tenant and the appellant shall have no objection to the same. He has also emphasized that two different agreements of the appellant with the same tenant were executed on the same date; one, for the warehouses and another, for vacant land, which clearly shows that appellant has intention to let out vacant land along with warehouses to single tenant and for the purpose of evasion of Service Tax, the said single transaction is artificially bifurcated to show as vacant land and warehouses separately. 6. Heard both sides and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the common facilities like internal pathway, boundary wall and gate, etc. He has also held that ratio of the open yard to the covered area would not change the nature of open yard being appurtenant to the covered area, as also that the nature of goods stored in the warehouse and that the open yard and that the rents were paid independently to these properties would not be relevant to decide whether the vacant land is appurtenant to the warehouse or otherwise. In view of the same, he has not considered this as vacant land and rather he held that the vacant land is appurtenant to the warehouse and hence covered under explanation (1) to the definition of RIPS given under section 65(105)(zzzz). 10. We have perused the map as also the agreements and observe that though the entire area at Sy.No.238 & 240 is having various sheds and open areas and the appellants have entered into different agreements with different clients viz., M/s Reliance Industries Ltd, M/s Avnash Automobiles Pvt Ltd, M/s ATR Cars Pvt Ltd, etc. In all these places, the remaining land of the survey area encompassed the covered sheds/warehouses, etc., in a manner that without using these vacant lands, the utility of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike there should not be any high/low tension overhead lines, which obstructs movement of cranes and other MHEs and some of the other conditions discussed above. In addition, there is specification for covered shed, which also provides for sidewalls with bricks, lighting in close warehouses to ensure safe working, proper painting inside and outside, tube lighting, minimum two entries to be provided in each ends, gates collapsible shutters, etc., as well as amenities including parking facility for trucks and trailers. Therefore, a conjoint reading of the terms and conditions of these two agreements would show that the vacant land for which separate agreement has been entered into is nothing but land appurtenant thereto to the covered area/shed/warehouse. They are closely interlinked and interdependent. Thus, by relying on the definition of RIPS under section 65(105)(zzzz), the vacant land has to be considered as land appurtenant to the warehouses. Therefore, we do not find any infirmity in the impugned order confirming the demand on this count. 12. Insofar as the demand on account of vacant land at A9 Industrial Area Kapparada, Kancherapalam, Visakhapatnam to M/s Avnash Automobiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was applicable at the time of leasing out. The fact that there were some other building for which no lease has been granted by the appellant to M/s Avnash Automobiles is obvious as the agreement is only for vacant land and there is no mention of any other agreement whereby the closed building, etc., was also given on lease. Therefore, merely because a land is appurtenant to any building, it will not get covered within the scope of service if building/shed has not been rented out. It is the other way round that where a building has been rented out, which also has land appurtenant thereto, then that land will also be included for the purpose of valuation of building. Therefore, this matter also needs to be remanded back to the Original Adjudicating Authority for redetermination of Service Tax liability. 13. Insofar as the letting out of property located at S.No.51/1 B, IDA, Block-A, Mindi, Visakhapatnam to M/s Avnash Automobiles, the Adjudicating Authority felt that the said property consisted of factory building/sheds located in a common compound with security gate and the said property was earlier used as a factory building of M/s Prax-Air India Pvt Ltd., from whom the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has been included in the total liability needs to be excluded for the purpose of calculating the demand. Therefore, this also needs to be remanded back. (B) Non-payment of Service Tax during the period May, 2009 to Feb, 2010 : - 15. It is an admitted fact that appellant has stopped making payment in respect of provision of RIPS during May, 2009 to February, 2010. There is no doubt about the classification or the valuation and the only dispute is as regards amount payable and paid. As per the appellant, the entire Service Tax liability was discharged except for the interest liability on the delayed payment but the same was not accepted in view of the fact that appellant has not included rent received for the open land and that certain documents were also not submitted. Since the issue as regards classification and Service Tax leviability is not disputed, the only dispute is whether the total amount of Service Tax is paid with interest or there is some short recovery. We find that since it would require recalculation of amount as well as verification of certain documents, etc., and therefore, to this extent, the impugned order is set aside and the matter is required to be reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Works Contract Service (WCS) and also certain portion under SFCS. Therefore, as far as the classification is concerned, there is no dispute that it is in the nature of SFCS. However, there is dispute as regards some of the amounts already paid under the category of WCS as well as under the category of SFCS. These amounts need to be adjusted against the total amount demanded from the appellant under this category. Therefore, this issue is also required to be remanded back to the Original Adjudicating Authority for recalculation. 18. Though the appellants have tried to argue that their activities were not liable to be covered in the ambit of SFCS and they were only engaged in transportation and for mere transportation, no tax will be payable by the transporters, the Adjudicating Authority has found that the appellants were engaged in discharging service under the category of WCS to M/s Hindustan Construction Company Ltd but have not included certain amounts in the taxable value while discharging the said service. The nature of work undertaken consisted of muck cleaning and disposal at designated area using 30MT dumpers. Going by the definition of SFCS, the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence in support of their claim for abatement in terms of Notification No.01/2006-ST. Therefore, this issue is also remanded back to the Original Adjudicating Authority for recalculation of Service Tax liability. 20. Learned Advocate has highlighted the fact that this is in terms of contract with M/s Schlumberger Asia Services Ltd for construction of warehouses and the contract was entered into on 09.07.2005 and the work was completed within two years time. This contract value was inclusive of both materials and services and therefore, in terms of judgment of Hon'ble Supreme Court in the case of Larsen & Toubro Ltd, for the period prior to July, 2007, indivisible contracts were not subjected to Service Tax. There is merit in the case, inasmuch as if it was in the nature of work contract then it could have been collected only as WCS and since prior to introduction of WCS as a separate service for the same contract, it cannot be charged to Service Tax under different head. However, there is no clear finding in this regards by the Adjudicating Authority to the effect whether the contract was in the nature of WCS or otherwise. Therefore, if it is in the nature of WCS and the period b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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