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2019 (5) TMI 1135 - AT - Service TaxClassification of service - Construction of Complex Service or Works Contract Service - supply of material coupled with the provision of work and labour - Composite Works Contract - DDA had undertaken a competitive bid process for selecting private entity to undertake the implementation of the project for the development of Residential Facility to be used to provide accommodation for athletes and officials participating in the ‘CWG’ and thereafter dispose of as apartments for residential purposes. HELD THAT:- DDA had undertaken a competitive bid process for selecting private entity to undertake the implementation of the project for the development of Residential Facility to be used to provide accommodation for athletes and officials participating in the ‘CWG’ and thereafter dispose of as apartments for residential purposes. For this purpose, a site comprising 11 hectares located adjacent to the Akshardham Temple was identified and DDA selected the Appellant as Project Developer for undertaking the implementation of the project. DDA further agreed to grant to the Project Developer and the Project Developer agreed to accept from DDA exclusive developer rights to the development of the Project on the Project Site as per the terms and conditions of the agreement. The responsibility of the Appellant under the PDA included construction of residential units, which necessarily involves supply of material coupled with the provision for work and labour. The materials have to be supplied as per the given specifications and work and labour have to be in accordance with the Good Industry Practices as per Clause 8.8 of the agreement. The activity undertaken by the Appellant under PDA would, therefore, qualify as a composite and indivisible works contract and by no means can be said to be ‘Service’ simplicitor. The show cause notice was, however, issued to the Appellant alleging that the Appellant is providing CCS services under Section 65(105)(zzzh) of the Act. The Supreme Court in COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] examined as to whether Works Contract Service can be classified under Section 65(105)(zzzh) and held that the scope of Section 65(105) (zzzh) is limited to cover contract of service simplicitor only and not a composite works contract. The Supreme Court noticed that it is only w.e.f 01 June, 2007 that Section 65(105)(zzzza) was introduced to cover composite works contract and so works contract cannot be covered under any other category of services prior to 01 June, 2007. Composite Works Contract cannot be taxed under CCS under Section 65(105) (zzzh) as the scope is limited to cover contract of service simplicitor only. The position that comes out very clearly, therefore, is that even prior to 01 June, 2007 and post 01 June, 2007, the nature of service rendered by the Appellant to DDA was Works Contract Service and not CCS. The show cause notice alleged that the Appellant was providing CCS service to DDA and the demand has also been confirmed under this category by the adjudicating authority. The impugned order, therefore, deserves to be set aside for this reason alone since the demand made under a particular category of service found to be incorrect in a subsequent proceeding, cannot be sustained. The nature of the services provided by the Appellant to DDA would fall under Works Contract Service since it was an indivisible works contract and it is only when work is undertaken as a contract of service simplicitor, that it would fall under the category of CCS - Demand set aside - appeal allowed - decided in favor of appellant.
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