TMI Blog2018 (10) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... T/242/2011 - Final Order No. 42468 / 2018 - Dated:- 24-9-2018 - Hon ble Ms. Sulekha Beevi C.S., Member (Judicial) and Hon ble Shri Madhu Mohan Damodhar, Member (Technical) Shri Raghavan Ramabhadran, Advocate for the Appellant Shri K. Veerabhadra Reddy, ADC (AR) for the Respondent JUDGEMENT Per Bench During the course of audit of account of the appellant by the internal audit unit of the department, it was noticed that the appellant did not pay service tax on the owner s share of construction in respect of the following Joint Venture Projects. Project Name Category of Service Commencement of Work Owner s Share of construction Jayanth Tech Park Commercial construction May 2006 88,338 sq. ft. Swarup Heritage Residential complex Sep. 2006 25,372 sq. ft. 1.2 The accounts also showed that appellant had discharged service tax on the builder share under Works Contract (Composition Scheme for Payment of Service Tax) Rules 2007. The department ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 2015 (39) STR 913 (SC). With regard to demand after 1.6.2007, the department has demanded the service tax under construction of residential complex service which cannot sustain. After 1.6.2007, appellant has discharged the service tax under works contract services under the composition scheme. He relied upon the decision of the Tribunal in the case of Real Value Promoters Pvt. Ltd. and Ors. Commissioner of GST and Central Excise, Chennai Vide Final Order Nos. 42436 to 42438/2018 dated 18.9.2018 to argue that the demand of service tax under construction of residential complex service cannot sustain after 1.6.2007 for the disputed period (May 2006 to March 2008). 2.1 The dispute in respect of Swarup Heritage is only on the land owner s share of UDS, while the demand for service tax in respect of Jayant on eligibility for composition scheme post 1.6.2007 on both builder s share and owner s share. The demand is captured in the following table: Project Service Tax Liability (INR) Owner s Share Builder s Share Swarup Heritage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Works Contract Services. As pointed out by the ld. counsels for appellants, there is no change in the definition of CICS/CCS/RCS after 1.6.2007. Therefore only those contracts which were service simpliciter (not involving supply of goods) would be subject to levy of service tax under CICS / CCS / RCS prior to 1.6.2007 and after. Our view is supported by the fact that the method /scheme for discharging service tax on the service portion of composite contract was introduced only in 2007. 7.11 The ld. AR Shri A. Cletus has tried to counter this contention by stating that works contract service is service / activity which would be of a general nature whereas the construction activities defined in Commercial or Industrial Construction Services, Construction of Complex Service and Construction of Residential Complex etc. are of special nature. He took support of the maxim generalia specialibus non derogant general things do not derogate special things . The counsel for appellants have submitted that as per Section 65A of the Act ibid, classification of service shall be based on the specific entries and the more specific description of service has to be preferred. He invited ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The grievance of the Revenue is with reference to commercial nature of the construction undertaken by the respondent and not on the correct classification of taxable activity. b. In the case of Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai 2018-TIOL-360-CESTAT-MUM, in respect of identical issue for the period from 2005 to 2012, the Tribunal in para 7 has held as under:- 7. On careful consideration of the submissions made by both the sides, we find that the issue falls for consideration is whether the services rendered by the appellant in respect of 52 contracts entered with various Govt. authorities need to be taxed under MMRC/CICS/ECIS or otherwise. It is on record and undisputed that the adjudicating authority has specifically held that all the 52 contracts which has been executed by the appellants are with material. Learned Counsel was correct in bringing to our notice that the said findings of the adjudicating authority that the appellant is eligible for abatement of 67% of the value of the goods is in itself the acceptance of the fact that the contracts were executed with material. It is also on record that the Revenue has not contested th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 show cause notices adduce to leviability of tax for rendering works contract service . On the contrary, the submission of the appellant that they had been providing works contract service had been rejected by the adjudicating authority. Therefore, even as the services rendered by them are taxable for the period from 1st June, 2007 to 30th September, 2008 the narrow confines of the show cause notices do not permit confirmation of demand of tax on any service other than commercial or industrial construction service . It is already established in the aforesaid judgment of the Hon ble Supreme Court that the entry under Section 65(105)(zzd) is liable to be invoked only for construction simpliciter. Therefore, there is no scope for vivisection to isolate the service component of the contract. d. In the case of Logos Construction Pvt. Ltd. Vs. Commissioner of Central Excise as reported in 2018 (6) TMI 1361, the Tribunal has held as under:- 5.1 The payment upto 01.06.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. c. For activities of construction of new building or civil structure or new residential complex etc. involving indivisible composite contract, such services will require to be exigible to service tax liabilities under Works Contract Service as defined under section 65(105)(zzzza) ibid. d. The show cause notices in all these cases prior to 1.6.2007 and subsequent to that date for the periods in dispute, proposing service tax liability on the impugned services involving composite works contract, under Commercial or Industrial Construction Service or Construction of Complex Service, cannot therefore sustain. In respect of any contract which is a composite contract, service tax cannot be demanded under CICS / CCS for the periods also after 1.6.2007 for the periods in dispute in these appeals. For this very reason, the proceedings in all these appeals cannot sustain. 6. From the discussions made above, we are of the considered opinion that the demand of service tax cannot sustain. The impugned order is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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