Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2012 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (6) TMI 165 - AT - Service TaxWorks Contract Service - Turnkey Contract - whether service provided to the Irrigation and CAD Department of Government of Andhra Pradesh are classifiable under the head "works contract service" - invocation of extended period of limitation - penalty imposable u/s 76, 77 & 78 - Held that:- Scope of work that was executed by Ramky-Murthy JV was a turnkey project in general and an engineering/procurement/construction/commissioning (EPC) project in particular, and what was executed by Maytas-NCC JV for the benefit of the State Government was an EPC project. Hence, services provided satisfy the statutory requirements of "works contract" defined u/s 65(105)(zzzza) inasmuch as (i) transfer of property in goods was involved in the transaction and VAT was paid on such goods, (ii) the contracts were for the purpose of carrying out irrigation projects of the Government through turnkey/EPC mode, and (iii) none of the contracts was in the excluded category of works contracts. Further, appellants have not been able to establish that any "dam" was built in execution of any of the EPC contracts and nothing in the text of the definition of "WC" indicate that turnkey/EPC projects for irrigation are excluded. Retrospective exemption notification - Notification No.41/2009 dated 23.10.2009 exempting works contract in respect of canals is not retrospectively effective. Furthermore, Circular dt. 24/05/2010 also stand unfavorable to appellant. - an exemption notification cannot be given retrospective effect unless it expressly provides for retrospective operation. Non-Taxability in view of introduction of 'Works Contract' w.e.f. 01.06.2007 - Held that:- What matters is the fact that the contracts were executed by the appellants and payments received by them after 01/06/2007 and therefore they are liable to pay service tax on the taxable service tax under the head 'works contract service' on the turnkey/EPC contracts in question. Benefit u/s 67(2) - Held that:- Benefit of Section 67(2) is liable to be granted to the assessees and accordingly the gross amount charged can be treated as cum-tax value and the service tax element can be deducted from it to arrive at the taxable value of works contract service. Deductions of retention money from gross amount charged - Held that:- Retention money was only a deferred payment and the appellants were entitled to receive the gross amount charged in the R.A. Bill. If that be so, there can be no valid claim for deduction of the retention money from the gross amount as rightly held by the adjudicating authority. CENvat credit - Held that:- No entitlement of CENVAT credit on inputs used as this benefit is barred under Rule 3(2) of the Works Contract (Composition Scheme) Rules, 2007. But there appears to be no embargo on taking CENVAT credit on capital goods or input services. Extended period of limitation - Held that:- Since, Ramky, the leading partner of the Ramky-Murthy JV, was registered with the Department under "WCS", filling ST-3 returns and paying service tax in respect of similar turnkey/EPC contracts after 01/06/2007. Hence, Ramky-Murthy JV cannot be assumed to have bona-fide belief that they were not aware of service tax liability under the head "WCS" in respect of the subject contracts - allegation of suppression of facts with intention to evade tax is sustainable - right invokation of extended period. Penalty u/s 78 - Held that:- Section 78 underwent an amendment w.e.f. 10/05/2008 and simultaneous penalty u/s 76 & 78 cannot be imposed. however in present case, since periods of dispute in these two appeals are partly beyond 10/05/2008, hence, matter needs to be examined fresh. Penalty imposed u/s 75, 77 and 76 is sustained.
|