TMI Blog2019 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst Revenue. - Appeal No.: ST/00250/2012 & ST/00274/2012 - Final Order No. 42927-42928/2018 - Dated:- 11-10-2018 - Shri Madhu Mohan Damodhar, Member (Technical) And Shri P. Dinesha, Member (Judicial) Shri. A. Cletus, ADC (AR) for the Appellant Ms. Radhika Chandra Sekhar, Advocate for the Respondent [ vice versa] ORDER Per P. Dinesha : The assessee is engaged in the execution of works contract in the nature of construction of residential unit. The land owners entered into joint agreement with the assessee for construction of flats. The contracts entered into by the assessee are a composite contract involving supply and transfer of property in goods during the execution of contract. Show Cause Notice dated 25.06.2010 was issued proposing to demand service tax of ₹ 3,26,60,648/- for the period June, 2005 to February, 2010 along with interest under Section 75 and penalty under Section 76, 77 and 78 of the Finance Act, 1994. After due process of law, the Commissioner of Central Excise, Customs Service Tax (Appeals), Coimbatore, vide the impugned Order dated 30.01.2012 confirmed the service tax under Construction of Residential Complex Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to and after 1.6.2007, for example, even in the show cause notice dated 20.10.2009 (relating to Appeal No. ST/723/2010), taxable value has been calculated at 33% of gross amount received which is an implicit admission that that activity involved both material supply as well as value services. Another ground for demand is that the appellants have not exercised their option for payment of service tax under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. In any case, the show cause notices implicitly agree that the work performed by the appellant is in the nature of composite works contract only. Based on the Hon ble Apex Court judgment in Larsen Toubro, such composite works contract then will not be liable to service tax levy prior to 1.6.2007. On the same ratio, such composite contracts even for the period after 1.6.2007 disputed in these appeals will still have to be held as composite works contract only and not pure service simpliciter contracts that could be classified under commercial or industrial construction service, or construction of complex service. To put in another way, to merit being classified as CICS or CCS, the service provider concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod / 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 our attention to CBEC‟s Circular 128/10/2010 dated 24.8.2010 which is reproduced as under:- The matter has been examined. As regards the classification, with effect from 1-6-2007 when the new service Works Contract service was made effective, classification of aforesaid services would undergo a change in case of long term contracts even though part of the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 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 brining 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 these findings of the adjudicating authority before the Tribunal. If that be so, even when the Revenue authorities are accepting the facts that the contracts executed by the appellant are nothing but works contracts, for the period in question, entire case of the Revenue in the show-cause notice stands demolished by the Apex Court in the case of Larse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 will get extinguished on account of the law that has been laid down by the Apex Court in the case of Larsen Toubro Ltd., (supra), relied upon by the Ld. Counsel. So ordered. 5.2 The Ld. Counsel has been at pains to point out that on-going projects which were only in the nature of works contract prior to 01.04.2007 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 above, we are convinced that the issue in the above case is identical and that therefore the ratio is required to be followed. Going therefore by the ratio laid down in the above case, we are of the view that the demand is not sustainable for which reason we set aside the same. 7. In the result : (i) Department Appeal (ST/250/2012) is dismissed; (ii) The assessee s appeal (ST/274/2012) is allowed. (Operative part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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