TMI Blog2022 (7) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... over/Bridge etc would therefore fall within the definition of taxable service of Commercial or Industrial Construction Service as given in Section 65 (25b) of the Finance Act 1994 which specifically excluded service in respect of Bridges, Railways, Airport etc from the tax net. Flyovers/Bridges cannot be equated with Plant, Machinery and Equipment. Therefore, activity undertaken by the Appellants would not fall within the definition of Erection, Commissioning or Installation under Section 65 (39a) as in force during 2004-05 and 2005-06 which covered Erection, commissioning or installation of Plant, Machinery or Equipment. The impugned orders vide which it is held that work undertaken by the Appellant in relation to Bridges, Rails, Airport etc was of only fabrication of various beams, structs, pylons etc and does not amount to undertaking of work of Civil construction is not tenable as fabrication of various Beams, Struts, Pylons, etc is indeed part of Civil construction and hence fall under the definition of Commercial or Industrial Construction Service as given in Section 65 (25b) of the Finance Act 1994 which excludes from its purview services provided in respect of road ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in the Proviso to said Section 73 (1) is inapplicable. It appears that non-payment of service tax could be on account of the belief that no service tax was payable in respect of the activities undertaken by the Appellants; that the very fact that various decisions of Tribunal referred to herein above have also held that no service tax is payable on activities such as those undertaken by the Appellants, itself shows that the Appellants belief was reasonable and bona fide. It is settled law that where demand has been worked out based on the records of maintained by the assessee and where non-payment of service tax is on account of bona fide belief that no service tax was payable, the larger period of limitation cannot apply. The Larger Bench recently by its decision in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] decided the said issue, it is settled law that where the issue has not been free from doubt requiring reference to Larger Bench, the larger period of limitation cannot apply. Accordingly the demand for the extended period is not sustainable on limitation also. Jurisdiction - HELD THAT:- It is seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge and recover service tax from their principal contractors namely L T Limited, Geodesic Techniques and Techno Fab on the above activities and did not pay service tax. 3. The Director General of Central Excise Intelligence (DGCEI), Ahmedabad, in or about April 2009, initiated investigations and based on Appellant s Annual Reports, Ledgers, and Statements of various persons issued Show Cause Notices both dated 21-4-2010 under section 73(1) of the Act on the premise that although appellants had rendered service of Erection, Commissioning or Installation covered by Section 65 (39a) of the Finance Act 1994 however failed to discharge their service tax liability. 4. The Appellants by their replies dated 30.10.2013 contested the said Show Cause Notice, both on merits and on limitation. The Commissioner of Central Excise, Surat, after considering the said reply of the appellants, vide his Order in respect of M K Enterprises held that activity undertaken by the Appellant in the State of Jammu and Kashmir is not liable to Service Tax since the Finance Act, 1994 does not extend to Jammu and Kashmir. Further, as regards service rendered in SEZ unit of Reliance Petroleum Ltd in Jamn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of Flyover/ Bridge at Kolkatta and Allahabad was one of construction service which is not liable to service tax, much less was it liable to service tax under the taxable service of Erection, Commissioning or Installation as defined in Section 65 (39a). The definition of Commercial or Industrial Construction Service as given in Section 65 (25b) of the Finance Act 1994, specifically excluded service in respect of Bridges. Therefore, any construction activity undertaken by the Appellant in respect of Bridges was not liable to service tax. The definition of Erection, Commissioning or Installation under Section 65 (39a) as in force during 2004-05 and 2005-06, covered Erection, commissioning or installation of Plant, Machinery or Equipment. He submitted that construction activity undertaken in respect of Bridges, can by no stretch of imagination be said to be Erection, Commissioning or Installation of Plant, Machinery or Equipment. Bridges cannot be equated with Plant, Machinery and Equipment. The Commissioner has in his Order-in-Original wrongly proceeded on the basis that the work undertaken by the Appellant in relation to Bridges/ Rails was one of fabrication and that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afts/ pen stocks, the tunnel would be incomplete. He submitted that applying the ratio of the aforesaid decisions to the present case, it would follow that construction or fabrication of Beams, Struts, etc undertaken by the Appellants for Bridges and Railways is integral part of Construction of Bridges and Railways as without which the Bridges and Railways would not be completed, and that since the said activity is excluded from taxable service under the definition of Commercial or Industrial Construction service under Section 65 (25b) of the Act, the same cannot therefore be taxed as Erection Commissioning or Installation of Plant, machinery or equipment. He submitted that fabrication or construction of Beams, Struts, etc of Bridges and Railways certainly does not amount to Erection, Commissioning or Installation of Plant, Machinery or Equipment as Beams, Sturts etc. of Bridges and Railways are not Plant, Machinery or Equipment. 8. As regards, the construction or fabrication undertaken by the Appellant in 2008-09 in respect of Metrorail and Monorail at Delhi and Vadala, he submitted that the same will also not be taxable as Erection, Commissioning or Installation as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioning or Installation, which is clearly not tenable in law. 11. As regards, fabrication of Hulls/ Parts of body of Ships, etc for ABG Shipyard Ltd, he submitted that the same was not undertaken by Appellant and in any event, the same is liable to service tax under Erection, Commissioning or Installation , that it is an admitted position in the Show Cause Notice that the Annual reports of the Appellant do not show any receipt of any amount from ABG Shipyard Ltd. This clearly shows that Appellant has not undertaken any fabrication work for ABG Shipyard. The Show Cause Notice has demanded service tax from the Appellant on payments made by ABG Shipyard to a firm other than the Appellant, having the same name as the Appellant. He pointed out from the records that Form 16A issued by ABG Shipyard shows payment to M.K. Enterprise with PAN AACPZ5313R, which is not PAN of the Appellants proprietor; that the Commissioner, in his findings has not rebutted this aspect. In any event, fabrication of Hulls/ Parts of body of Ships, etc is manufacture of exciseable goods on job work basis out of the materials of the clients and can by no stretch of imagination be called Erection, Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been free from doubt requiring reference to Larger Bench, the larger period of limitation cannot apply. 14. Learned Counsel for the appellant pointed out that in any event Commissioner of Central Excise, Surat did not have jurisdiction to pass Order demanding service tax, when the alleged taxable events had occurred outside his jurisdiction in places such as Kolkatta, Allahabad, Chennai, etc., that it is an admitted fact that the activities in question were undertaken by the Appellant at various sites located outside the jurisdiction of Commissioner of Central Excise, Surat, in places such as Kolkata, Allahabad, Chennai, etc. The alleged taxable events had therefore occurred outside the jurisdiction of Commissioner of Central Excise, Surat. He therefore did not have jurisdiction to pass Order demanding Service tax in respect of alleged taxable events which occurred outside his jurisdiction, in support of the said proposition that where the alleged taxable events have occurred outside the jurisdiction of the authority in question, such authority cannot pass order demanding the tax, he relied upon the following decisions: (a) Supermax Personal Care P. Ltd v UOI 2021 (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax by the main contractor was not a deciding factor as far as taxability of the service rendered by the sub-contractor is concerned. In support of his argument, learned AR also placed reliance on the following judgments:- (a) Shree Gurukrupa Construction Company [Final Order - A/11471/2019] (b) VPSSR Facilities vs. Commissioner of VAT [WP (C) 7843/2014] (c) Nitin Spinners Limited - [2017 (355) E.L.T. 562 (Tri. -Del.)] (d) Star Industries - [2015 (324) E.L.T. 656 (S.C.)] (e) Northern Operating Systems Pvt. Limited [2022 Live Law (SC) 526] (f) Neminath Fabrics Pvt. Limited - [2010 (256) E.L.T. 369 (Guj.)] (g) Mathania Fabrics - [2008 (221) E.L.T. 481 (S.C.)] (h) Josts Engineering Company Limited 2002 (8) TMI 107-Supreme Court 17. On specific query by the bench, it was clarified by the learned counsel appearing on behalf of appellant that as regard service rendered by appellants as sub-contractor of L T, they are not contesting the demand on the ground that their activity covered under works contract as their only stand is that their activity was one of construction service of civil structure in respect of Brides, Railway, Airport etc and further tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h would become part of civil structure viz. Flyover/Bridge etc would therefore fall within the definition of taxable service of Commercial or Industrial Construction Service as given in Section 65 (25b) of the Finance Act 1994 which specifically excluded service in respect of Bridges, Railways, Airport etc from the tax net. Flyovers/Bridges cannot be equated with Plant, Machinery and Equipment. Therefore, activity undertaken by the Appellants would not fall within the definition of Erection, Commissioning or Installation under Section 65 (39a) as in force during 2004-05 and 2005-06 which covered Erection, commissioning or installation of Plant, Machinery or Equipment. 21. The impugned orders vide which it is held that work undertaken by the Appellant in relation to Bridges, Rails, Airport etc was of only fabrication of various beams, structs, pylons etc and does not amount to undertaking of work of Civil construction is not tenable as fabrication of various Beams, Struts, Pylons, etc is indeed part of Civil construction and hence fall under the definition of Commercial or Industrial Construction Service as given in Section 65 (25b) of the Finance Act 1994 which excludes fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We also find that the classification followed by the lower authorities is not sustainable. From the nature of work and the material involved it is clear that supplying and fixing Metal Crash Barriers along the highways cannot be considered as erection and commissioning of any plant and machinery or similar equipments. 7 . The Metal Crash Barriers are essentially part and parcel of highways and appellant s plea that the exemption available to the construction of road will cover these structures also has much force. The Manual of Specifications and Standards for National Highways, issued by Government of India, Ministry of Shipping, Road Transport Highways mentions Metal Beam Crash Barriers as one of the manufactured materials for use in the highways. 8 . Considering the above discussions and findings, we hold the impugned order is not sustainable and accordingly allow the appeal with consequential relief, if any. (c) PES Engineers P. Limited vs. CST 2017 (17) GSTL 57 5.7 Discernibly, steel liners fabricated by the appellants is meant to reinforce and complete the excavated tunnel area. Tunnel becomes complete for the purposes it has to serve, only after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such taxable entry, the erection, Commissioning or installation does not embrace fabrication for bringing the appellant to the fold of Section 65(39a) of Finance Act, 1994. Therefore, on such preliminary observation of the law, the appellant should succeed when paras 2 3 of the show cause notice has not made any effort to bring out service element involved in Sl. No. 1, 3 6 of the work order to the ambit of taxation. 7 . When we find that the aforesaid moot point govern the case, we are not inclined to remit the matter to the adjudicating authority. We also do not consider that Revenue may be prejudiced, if appeal is allowed, since law does not warrant the commodity to be taxed under the provision of Finance Act, 1994. As we have gone by aforesaid logic and conclusion, we do not consider to discuss further on the citation made by the ld. Counsel. (b) Swift Engineers vs. CGST 2019 (8) TMI 826. 4 . Ld. DR appearing for the Revenue drew our attention to the detailed discussions of adjudicating authority. He has relied on the adjudicating authority's findings that the appellant are undertaking the erection and fabricating structurals. He has held the appellant&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited vs. CCE 2015 (39) STR 454. After hearing both sides duly represented by Shri Anand Nainawati, learned advocate appearing for the assessee and Shri R.S. Srova, learned JDR appearing for the Revenue, we find that the service tax stand confirmed against the appellant by holding that they are providing service of Erection, Commissioning and Installation to their clients. On the other hand, it is the appellant s contention that they are engaged in fabrication of structures at site for their clients, which activity amounts to manufacture resulting in emergence of excisable items. However, no Excise duty is being paid on the same, as the same is exempted in terms of Notification No. 67/95. Accordingly, it stand contended before us that inasmuch as they are engaged in manufacture of excisable goods, activity undertaken by them cannot be considered to be a service being provided to their clients so as to make them liable to service tax payment. The above plea of the appellant stand rejected by the Commissioner on the ground that the fabrication of various goods at site does not amount to manufacture as has been held in various decisions of the Tribunal like in the case of Do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants at the site of their principal amounts to service and is liable to service tax under the category of erection, commissioning and installation service. Hence, the decision referred to by the learned SDR is not applicable to this case. On the other hand, we find that the decision of Larger Bench in the case of Mahindra Mahindra Ltd. reported in 2005 (190) E.L.T. 301 (Tri.-LB) is applicable to the facts of this case. 27 . From the above discussion, it is clear that the activity undertaken by the appellant is covered under Section 2(f) of Central Excise Act as manufacturing activity. Hence the appellants are not liable to pay the service tax on the activities undertaken by them. Hence, the impugned order does not hold any merit on this issue. The same is set aside and the appeal filed by M/s. Neo Structo Construction Ltd. is allowed. 23. Even if the said job work activity of production amounts to rendering of service, it would at best be Business Auxiliary Service covered under Section 65 (19) (v) of Finance Act 1994 and exempted under Notification No.8/2005-ST dated 1-3-2005. It is not in dispute that the production was done with materials of the clients at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re non-payment of service tax is on account of bona fide belief that no service tax was payable, the larger period of limitation cannot apply as held in the following judgements: Steelcast Ltd v CCE 2009 (14) STR 129 (upheld in 2011 (21) STR 500), (a) Religare Securities Ltd v CST 2014 (36) STR 937, (b) Lanxess Abs Ltd v CCE 2011 (22) STR 587 and (c) K.K. Appachan v CCE 2007 (7) STR 230. 26. Further, the question whether the sub-contractor is liable to pay the service tax, itself had not been free from doubt during the disputed period. The Central Board of Excise and Customs changed its previous view that service tax is not payable by sub-contractor, by Circular dated 23rd August 2007. Although, the Larger Bench recently by its decision in CST v Melange Developers 2020 (33) GSTL 116 Tri (LB) decided the said issue, it is settled law that where the issue has not been free from doubt requiring reference to Larger Bench, the larger period of limitation cannot apply. Accordingly the demand for the extended period is not sustainable on limitation also. 27. As regards the issue of jurisdiction is concerned, it is seen that appellant have obtained registration fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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