TMI Blog2023 (5) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... en followed by the Chennai Bench of the CESTAT in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] - In the case of M/s. Real Value Promoters Pvt. Ltd., it has been held that demand of Service Tax under construction service and commercial or industrial construction service in respect of composite contracts up to 01.06.2007 is not sustainable. The appellant has admitted that the services rendered by them are taxable under works contract service with effect from 01.06.2007 in the grounds-of-appeal and also before the lower authority. As the activities undertaken by the appellant were in the nature of works contract, the demands raised under construction service and commercial or industrial construction service till 31.05.2007 are not sustainable - the appellant is required to pay Service Tax of Rs.1,82,467/- towards works contract service during the period from June 2007 to March 2008 (as detailed in Annexure-IV-A to the Show Cause Notice) and Rs.8,50,546/- towards works contract service during the period from April 2008 to March 2009 (as deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the period from 2004-05 (from October 2004) to 2008-09 (up to March 2009). 3. On the basis of intelligence collected by the Anti-evasion Unit of the Commissionerate and investigations conducted after obtaining various documents such as copies of work orders, financial statements, balance sheets and Form 16-A issued by M/s. BSNL, Airport Authority of India and also M/s. LIC, a Show Cause Notice vide C.No. V/ST/15/69/2009-Cx.Adj. dated 21.04.2010 came to be issued, proposing to demand Service Tax of Rs.12,98,611/- towards construction service / commercial or industrial construction service / works contract service for the period from 2004-05 (October 2004 onwards) to 2008-09 (up to March 2009) and an amount of Service Tax of Rs.14,531/- towards cleaning activity provided by the appellant during the period from 2005-06 to 2008-09, invoking the provisions of Section 73(1) of the Finance Act, 1994 and also proposing to impose penalties under Sections 76, 77 and 78 of the Act. 4. The Joint Commissioner of Central Excise and Service Tax, Tiruchirappalli held that the services rendered by the assessee would fall under the category of construction service under Section 65(30a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 7.4 In support of his arguments, the Learned Advocate for the appellant has relied on the following decisions: - (i) Commissioner of C.Ex. Cus., Kerala v. M/s. Larsen Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)]; (ii) M/s. Real Value Promoters Pvt. Ltd. v. Commissioner of G.S.T. and Central Excise, Chennai ors. [Final Order Nos. 42436-42438/2018 dated 18.09.2018 CESTAT Chennai]; (iii) M/s. Jain Housing Construction Ltd. v. The Commissioner of Service Tax, Chennai [Final Order Nos. 40077-40079/2023 dated 24.02.2023 CESTAT, Chennai]; (iv) M/s. South India Shelters Pvt. Ltd. v. The Commissioner of Central Excise, Chennai [Final Order Nos. 40123-40124/2023 dated 07.03.2023]. 8.1 The Learned Authorized Representative appearing for the Revenue has reiterated the findings of the lower authorities. He submitted that the appellant, though had taken registration in 2004, had neither paid any Service Tax nor filed their Service Tax returns till the time investigation was taken up by the Department and that the services rendered by the appellant would be taxable under construction service under Section 65(30a) of the Finance Act, 1994 with effect from 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, tunnel, long distance pipeline and dam 12. With effect from 16.06.2005, the scope of construction service was expanded as commercial or industrial construction service under Section 65(25b) of the Finance Act, 1994, as under: - (25b) commercial or industrial construction means (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively, it was the assumption of many that such construction activities which are undertaken as a composite contract, involving transfer of property in goods {which falls under the taxation domain of the State Governments, being a deemed sale as per Article 366 (29A)}, can be taxed under these service categories, in so far as the service portion is concerned. Hence, in order to exclude the value of goods involved in such contracts, exemption notifications under section 93 have been issued to exclude a portion of value towards the value of transfer of property in goods, which is known as abatement. 3.4 Subsequently, the service portion in the composite works contracts, was specifically made as a taxable service under WCS with effect from 01.06.2007 and the manner of determination of the value of such service portion has been prescribed vide Rule 2A of the Service Tax (Determination of Value) Rules, 2006, framed under Section 94 (2) of the Act. An alternative in the form of Works Contract (Composition scheme for payment of Service Tax) Rules, 2007 has also been introduced to pay service tax at a lesser rate on the gross amount (including the value of transfer of property i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax under CICS / CCS, on composite contracts, involving transfer of property in goods, for the period post 01.06.2007, the said demands of service tax cannot be sustained, as these services would cover only pure service activities, as held by the Hon ble Supreme Court in Larsen Toubro (supra). At the stage of adjudication or appeal proceedings, the demand cannot be confirmed under WCS, when the show cause notice raises demand on CICS/CCS. Such an attempt would amount to travelling beyond the scope of the show cause notice, which is not permissible. 3.9 Though the definition of WCS incorporates the definitions of CICS / CCS into it, the scope of coverage of these services are distinct. While the definition of CICS / CCS would cover such construction activities without involving any transfer of property in goods (Example:- Where all materials required for the construction are supplied by the service recipient and the service provider is engaged only for provision of construction service), a composite construction activity would fall only under WCS. .. .. .. .. 8. In the light of the discussions, findings and conclusions above and in particular, relyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of properly in goods transferred in the execution of a works contract. 10. In view of this specific decision and the admitted claim of the appellant that they are not providers of commercial or industrial construction service but of works contract service , no tax is liable on construction contracts executed prior to 1st June, 2007. 11. Insofar as demand for subsequent period till 30th September, 2008 is concerned, it is seen that neither of the two s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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