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2019 (7) TMI 1793 - CESTAT NEW DELHILevy of service tax - Works Contract Service - composite contracts involving supply of goods/ materials during execution of civil constructions prior to 1 June 2007 - demand under a category not specified in SCN - benefit of the Composition Scheme, post 1 June 2007 - inclusion of value of free of cost material in the total assessable value - Levy of Service Tax on renting of immovable property. Levy of service tax - composite contracts involving supply of goods/ materials during execution of civil constructions prior to 1 June 2007 - HELD THAT:- The Supreme Court in COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] noticed that it is only w.e.f 01 June, 2007 that Section 65(105)(zzzza) of the Act was introduced to cover composite works contract and so service rendered in a works contract cannot be covered under any other category of service prior to 01 June, 2007. The position that emerges is that prior to 1 June 2007, Service Tax could not be levied on a composite works contract involving supply of goods/ materials for execution of Civil Construction. Thus, levy of Service Tax for a service provided prior to 1 June 2007 under “Commercial and Industrial Service” or under “Construction of Complex Service” cannot be sustained. Demand under a category not specified in the SCN - HELD THAT:- A Division Bench of the Tribunal in M/S GURJAR CONSTRUCTION VERSUS COMMISSIONER CENTRAL EXCISE, JAIPUR-II [2019 (5) TMI 717 - CESTAT NEW DELHI] examined such a position and after placing reliance on the decisions of the Supreme Court in HINDUSTAN POLYMERS CO. LTD. VERSUS COLLECTOR OF C. EX., GUNTUR [1996 (12) TMI 84 - SUPREME COURT] and RECKITT & COLMAN OF INDIA LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [1996 (10) TMI 100 - SUPREME COURT] observed that a demand made under a particular category cannot be sustained under a different category - The Commissioner, therefore, committed an illegality in confirming the demand under a category not proposed in the show cause notice. Benefit of the Composition Scheme, post 1 June 2007 - HELD THAT:- The Composition Scheme cannot be treated as an exemption Notification under any circumstance. The Department does not dispute that the Appellant discharged the Service Tax liability by payment of an amount equivalent to a certain percentage of the gross amount charged for the works contract as stipulated in Rule 3 of the Composition Scheme since the only reasons given by the Department are that the Appellant did not submit the option in writing to the Department before payment of Service Tax and the tax paid did not include the cost of the material supplied free of cost to the Appellant. The Constitution Bench of the Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY & ORS. [2018 (7) TMI 1826 - SUPREME COURT] was constituted to examine what would be the interpretative rule to be applied while interpreting a tax exemption provision/ notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. The Supreme Court observed that the core issue to be examined in the event of any ambiguity in an exemption notification is whether the benefit of such an ambiguity should go to the assessee or should be considered in favour of the revenue by denying the benefit of the exemption to the assessee. The Supreme Court concluded that every taxing statue including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly - the impugned order in, so far as it denies the benefit of the Composition Scheme to the Appellant for the reason that option was not exercised by the Appellant in writing before the Department cannot be sustained. Inclusion of value of free of cost material in the total assessable value in the Composition Scheme - HELD THAT:- The Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] observed that the value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient and such a value has no bearing on the value of services provided by the service recipient - The Commissioner, therefore, could not have denied the benefit of the Composition Scheme for the reason that the appellant had not included the cost of material supplied free of cost to the Appellant in the gross value of services. Levy of Service Tax on renting of immovable property - HELD THAT:- The Appellant has deposited the demand of ₹ 5562/- with interest and, therefore, the issue is not required to be examined - Such being the position the demand of Service Tax in the impugned order except under renting of immovable property cannot be sustained. Appeal allowed - decided in favor of appellant.
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