9911796707
TMI Blog2025 (4) TMI 1187X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with interest and equal amount of tax confirmed, as penalty. Service Tax Appeal No. 76809 of 2019 has been filed against Order-in-Original no. 3/S.Tax/Commr/2016 dated 28.03.2019, passed by the Commissioner of Central Excise and Service Tax, Jamshedpur, wherein the Ld. Commissioner has confirmed the demand of service tax of 2,96,24,436/- for the period from October 2014 to March 2017, along with interest and equal amount of tax confirmed, as penalty. 2. Brief facts of the case are that the Appellant is an urban infrastructure service provider and is engaged in providing various services to the township of Jamshedpur, relating to water, power, infrastructure, public health and horticulture service. The Appellant had entered into an agreement with effect from 01.04.2007 with M/s Tata Steel Ltd. ('TSL'), whereby the Appellant is required to provide services in relation to cleaning, maintaining, repairing, services, removing, altering, painting and renovation of building and properties of TSL located in Jamshedpur. To provide said services of repair, renovations etc., the Appellant had procured goods like pipes, steel items, cement, bricks and discharged VAT liability on the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the valuation of said taxable service under Rule 2A(ii)(c) of the Valuation Rules is incorrect and the said services ought to be valued under Rule 2(A)(i) of the Valuation Rules. 2.4. With respect to the period post 01.07.2012, a Show Cause Notice dated 17.10.2017 was issued upon the Appellant proposing to demand Service Tax of Rs. 2,96,24,436/- under Section 73(1A) of the Finance Act along with applicable interest and equivalent penalty. The said Show Cause Notice was based on the allegations mentioned in the Show Cause Notice dated 22.04.2015 pertaining to prior period. In this periodical SCN, it was alleged that the Appellant had misclassified the underlying transaction as works contract service and thus, wrongly claimed abatement of service tax under Rule 2A(ii)(c) of the Valuation Rules. 2.5. The Ld. Commissioner vide Order-in-Original No. 03/S.Tax/Commr./2019 dated 28.03.2019 held that the service rendered by the Appellant is classifiable as Works Contract Service. It was held that the valuation of said taxable service under Rule 2A(ii)(c) of the Valuation Rules is incorrect and the said services ought to be valued under Rule 2(A)(i) of the Valuation Rules. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * BSBK P Ltd. v. Commissioner [2020 (12) TMI 1015 - CESTAT New Delhi] * G.E. Power India Ltd. v. Commissioner Central Excise, New Delhi [2021 (2) TMI 116- New Delhi] * SEW Infrastructure Ltd. v. CCE, Raipur [2023 (5) TMI 764- CESTAT New Delhi] 4.4. The appellant referred to paragraph 3.0 of the impugned order dated 30.06.2016 passed by the Ld. Commissioner wherein he has observed that the underlying agreement qualifies as 'works contract', on the basis VAT returns, furnished by the appellant; it is submitted that it is an undisputed fact that the appellant has discharged VAT to the extent there has been transfer of property in goods which has been recorded in the impugned order and thus, such composite contract cannot be classified as a pure service contract for the purpose of levy of service tax under the category of 'management maintenance or repair 'service'. 4.5. Accordingly, the appellant submits that service tax demand confirmed in the impugned order under the category of management, maintenance or repair service, for the period from October 2009 to June 2012, is liable to be set aside. 5. In respect of the demand of service tax confirmed for the period from July 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (58) GSTL 440 (Tri-Bang.)] * ABM Knowledge Ltd. v. Commissioner of Customs (Appeals), Mumbai-III [2019 (27) GSTL 694 (Tri-Mumbai)] * Philips Electronics (India) Limited Vs. CCE & ST -Vadodara-I (Vice Versa) [2019 (6) TMI 361-CESTAT Ahmedabad] 5.1. It is the contention of the appellant in this regard that since the Ld. Commissioner has held that subject contract is classifiable as 'works contract', therefore demand for the period July 2012 to March 2017 ought to have been set aside on this ground alone; Confirmation of demand on the ground of valuation of such agreement is clearly beyond the scope of SCN and hence the impugned orders are liable to be set aside. 5.2. Regarding the valuation adopted by them, the appellant submits that they have correctly valued the works contract service under Rule 2A(ii); As per the agreement between the Appellant and TSL, the Appellant is required to raise its invoice for the composite service at the beginning of each month based on agreed contract value and hence, material requirements and details of such procurement is not known to the Appellant at the time of raising of invoice. Consequently, it is contended that it is impractical to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal documents. 9. We observe that the Appellant has entered into a contract with M/s. Tata Steels Ltd (TSL) and as per the contract, they were required to provide services in relation to cleaning, maintaining, repairing, services, removing, altering, painting and renovation of building and properties of TSL located in Jamshedpur. To provide said services of repair, renovations etc., the Appellant had procured goods like pipes, steel items, cement, bricks and discharged VAT liability on the goods under the Jharkhand Value Added Tax Act. During the period from 2009-10, up to 30.06.2012, the Appellant classified the services provided under the aforesaid agreement as 'Commercial or Industrial Construction Services (CICS) and claimed abatement in terms of Sl. No. 10 of Notification No. 01/2006-ST dated 01.03.2006. Thereafter, with effect from 01.07.2012, the Appellant classified the services in question as 'Works Contract ' Service and accordingly was discharging service tax. For the period post 01.07.2012, it has been alleged that the classification of the subject transaction as 'works contract' is incorrect inasmuch as the Appellant failed to submit any documentary evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x confirmed in the impugned order for the period prior to 30.06.2012 under the category of 'management maintenance or repair' service is not sustainable. Accordingly, we hold that the appellant has rightly classified the said service under the category of 'Commercial or Industrial Construction Service' (CICS) and claimed abatement in terms of Sl. No. 10 of Notification No. 01/2006-ST dated 01.03.2006. 9. Regarding the demand of service tax confirmed for the period from period from July 2012 to September 2014 in Appeal No. ST/76674/2016 and demand of service tax confirmed for the period from October 2014 to March 2017 in Appeal No. ST/78809/2019, in the impugned orders, we observe that it has been held by the Ld. Commissioner that for the period post July 2012, the underlying agreements qualifies as works contract services. However, in the impugned order the classification of the subject transaction as 'works contract' has been held as incorrect inasmuch as the Appellant failed to submit any documentary evidence to substantiate discharge of VAT on the value of goods involved in the execution of goods. We observe that after accepting the classification of the service as 'work contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that an assessee can opt for Rule 2(A)(ii) only if the assessee is unable to determine the value under Rule 2(A)(i). In this regard, we observe that Rule 2A provides two methods of valuing the works contract service and entails a right upon the assessee to choose any method of valuation of works contract. Thus, it is at the discretion of the Appellant to choose the method of valuation as per their contract and convenience. Since the Appellant had not entered into the contract with intention of valuing the service and material elements separately, hence, the Appellant chose to determine value of goods under Rule 2(A)(ii), as it provides for a simplified and specific method of computation. Further, we observe that the appellant has categorically submitted that the value of material used was not known to them at the beginning of the month and hence the appellant cannot avail the method of valuation as envisaged in Rule 2(A)(i) of the Valuation Rules. Thus, we hold that the method of valuation adopted by the appellant as per rule 2(A)(ii) is in order. Accordingly, we hold that the demand confirmed in the impugned order on account of valuation of works contract by adopting Rule 2(A(i) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
