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2023 (10) TMI 1090 - AT - Service TaxWorks which involve supply of material and service - composite contract - Denial of benefit of abatement on the gross value to the extent of 67% as provided in N/N. 01/2006-ST dated 01.03.2006 - time limitation - Penalties under Section 77 and 78 of FA - HELD THAT:- The service recipient is also admittedly deducted 4% Works Contract Tax TDS under the Punjab VAT Act, 2005 on the payment made to the appellant and this 4% Works Contract Tax TDS is only deducted if the payment is made for a Works Contract in terms of Section 27 of the Punjab VAT Act, 2005. The CBEC has issued a Circular No. B1/16/2007-TRU dated 22.05.2007 and clarified Contracts treated as works contract for purposes of levy of VAT/Sales Tax shall be treated as works contract for purpose of levy of Service Tax. This is clear from the definition under Section 65(105)(zzzza) - The said Circular issued by the Board is binding on the Revenue Authorities as held by the Hon’ble High Court of Punjab and Haryana in the case of AMBUJA CEMENTS LTD. VERSUS UNION OF INDIA [2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT]. Time Limitation - HELD THAT:- The substantial demand is barred by limitation because the department has not been able to establish that the appellant had intended to evade the payment of service tax which is essential ingredients to invoke the extended period of limitation. Penalties under Section 77 and 78 of FA - HELD THAT:- Since the Audit raised the objection, the appellant paid the service tax after availing the abatement of 67% alongwith interest and therefore, it can safely be said that there was no intention to evade the payment of service tax, therefore, the penalties under Section 77 and 78 are not liable to be imposed on them. The impugned order is not sustainable in law and the same is set-aside - Appeal allowed.
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