TMI Blog2019 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. M/s. RPP Constructions, the assessee, appellants in this appeal, are providers of taxable service and are registered with the Department for providing service under the categories of: I. Commercial or Industrial Construction Service (CICS) II. Erection, Commissioning and Installation Service (ECIS) III. Interior Decorator Service, and IV. Construction of Residential Complex Service 2. Pursuant to investigations carried out by the Department Officers, it emerged that appellants were engaged in various projects; that the activities performed by them were exigible to service tax liability being taxable services; that, however, service tax had not been appropriately discharged on the said services. 3.1 Accordingly, a Show Cause Notice dated 20.10.2009 was issued to the appellants inter alia proposing total demand of service tax of ₹ 6,20,49,021/- with interest thereon and imposition of penalties under various provisions of law. In adjudication, vide the impugned Order dated 13.12.2010, the Commissioner inter alia confirmed a total amount of ₹ 2,52,28,175/- with interest thereon, imposed equal penalty under Section 78 of the Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, this is a composite contract and the ratio laid down in the cases of M/s. Larsen Toubro Ltd.(supra) and M/s. Real Value Promoters Pvt. Ltd.(supra) will apply. C. Project Name: SSP (i) Work involved: Civil work at Steel Plant at Salem. (ii) Amount of Service Tax demanded: ₹ 5,55,873/- (iii) Ground for confirmation in the impugned Order: The adjudicating authority has simply stated that the work undertaken by the assessee is taxable. (iv) Defence: That they are only sub-contractors and the main contractor has discharged the tax liability involved. For this purpose, he relies on the ratio laid down by the Tribunal in the case of M/s. Power Mech Projects Ltd. Vs. Commissioner of Customs, Guntur - 2017 (48) S.T.R. 165 (Tri.- Hyd.) D. Project Name: SIPCOT, Perundurai (i) Work involved: Construction of infrastructural building in EPIP, Gummidipoondi. (ii) Amount of Service Tax demanded: ₹ 4,25,660/- (iii) Ground for confirmation in the impugned Order: The submission of the assessee that the projects are completed before introduction of the impugned service before 10.09.2004 has been rejected by the adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore a composite Works Contract. Hence, the ratio laid down in the cases of M/s. Larsen Toubro Ltd. (supra) and M/s. Real Value Promoters Pvt. Ltd. (supra) will apply. H. Project Name: NEWELI BRIDGE ROAD (i) Work involved: Construction of structural and electrical work for site office, security house, drains, water supply, roads, etc. (ii) Amount of Service Tax demanded: Rs.75,735/- (iii) Ground for confirmation in the impugned Order: The adjudicating authority in paragraph 15.08.04 has held that NLC is a commercial organization and although the project includes road work, since there is no split up figure, the entire demand has been confirmed. (iv) Defence: Abatement of 67% has been granted to the assessee. The activity is therefore a composite Works Contract. Hence, the ratio laid down in the cases of M/s. Larsen Toubro Ltd.(supra) and M/s. Real Value Promoters Pvt. Ltd.(supra) will apply. I. Project Name: VPR (i) Work involved: Construction of civil work for Virapandi Common Effluent Treatment Plant at Tiruppur. (ii) Amount of Service Tax demanded: ₹ 11,78,476/- (iii) Grounds for confirmation in the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in laying and other installation for transport of fluids. Hence, it is classifiable under Erection and Commissioning Service. The adjudicating authority has also rejected the contention of the assessee that it should be classified under Works Contract Service. (iv) Defence: Abatement of 67% has been granted to the assessee. The activity is therefore a composite Works Contract. Hence, the ratio laid down in the cases of M/s. Larsen Toubro Ltd.(supra) and M/s. Real Value Promoters Pvt. Ltd.(supra) will apply. D. Project Name: ATP (i) Work involved: Water Supply Scheme to Ambasamudaram Municipality. (ii) Amount of Service Tax demanded: ₹ 5,65,068/- (iii) Ground for confirmation in the impugned Order: The adjudicating authority in paragraph 16.05.02 has rejected the plea of the assessee that the work was completed before 16.06.2005 i.e., before introduction of Erection, Commissioning and Installation Service (ECIS). (iv) Defence: Abatement of 67% has been granted to the assessee. The activity is therefore a composite Works Contract. Hence, the ratio laid down in the cases of M/s. Larsen Toubro Ltd.(supra) and M/s. Real Value Promoters Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority in paragraph 16.08 has held that the appellant did not produce any evidence to show that the main contractor has paid service tax. (iv) Defence: The tax liability has been paid by the main contractor. III. Interior Decorator Service : A. Project Name: CPCL (i) Work involved: Landscape development work. (ii) Amount of Service Tax demanded: ₹ 13,61,820/- (iii) Ground for confirmation in the impugned Order: The adjudicating authority in paragraph 17.02 has rejected the plea that service tax under Interior Decoration Services are leviable only to the person who was engaged in business of providing by way of advice, consulting, technical assistance or any other manner relating to planning, design or beautification of space, whether man made or otherwise, including a landscape designer. (iv) Defence: The assessee has provided only civil work and has not provided any advice, consulting, technical assistance, etc., with regard to Interior Decoration. The phrase any other manner in the definition cannot have an unlimited scope. B. Project Name: PUZHAL (i) Work involved: Beautification work of landscape. (ii) Amount of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation in the impugned Order : The adjudicating authority in paragraph 18.04 has stated that the Police Housing Corporation which has entrusted the work to the assessee, is a commercial concern. (iv) Defence : The matter is no longer res integra and has been settled in a number of decisions, for example in the case of M/s. Bismi Engineering Contractors (supra) and M/s. Sima Engineering Constructions (supra). 6.1 On the other hand, Ld. AR Shri. K. Veerabhadra Reddy appearing on behalf of the Department supported the impugned Order and reiterated the findings therein. 6.2 With regard to the reliance of the Ld. Advocate on the ratio laid down in the cases of M/s. Larsen Toubro Ltd.(supra) and M/s. Real Value Promoters Pvt. Ltd.(supra), he draws our attention to the different ratio laid down in the following case laws : M/s. G.D. Builders Vs. Union of India-2013 (32) S.T.R. 673 (Del.); M/s. BCC Developers and Promoters Pvt. Ltd. Vs. C.C.E., Jaipur - 2017 (52) S.T.R. 22 (Tri. - Del.); and M/s. National Building Construction corpn. Ltd. Vs. C.C.E. S.T., Raipur - 2017 (51) S.T.R. 74 (Tri. - Del.). 6.3 With regard to the arguments of the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(1) [IOCL], 3.01.02(6) [PHPI, 3.01.02(7) [HPCL]and 3.01.02(13) [HPCLI of the Show Cause Notice dated 20.10.2009, the demand of tax has been withdrawn on the ground that the Hon'ble High Court of Madras has granted stay of all proceedings including recovery proceedings from levying, demanding or collecting service tax with effect from 10.09.2004 vide stay order dated 05.02.2007 obtained by the Southern Region Petroleum Corporation Contractors Welfare Association in MP No. 1/2007 in WP No. 4042/2007 of which the noticee is a member. The Hon'ble High Court of Madras vide its order dated 05.02.2007 has passed the following order: Reopening in respect of past period alone is stayed'. As per Explanation under Sub-Section (1) of Section 73 of the Finance Act, 1994, where the service of the notice is stayed by an order of a court the period of stay shall be excluded in computing the time for issuing Show Cause Notice; (ii) Having issued the Show Cause Notice on 20.10.2009, the decision of the Commissioner to withdraw the demand of service tax on the aforesaid grounds is not legal and proper. The Commissioner ought to have waited for the outcome of the Hon'ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The completion certificate dated 23.07.2001 marked 'MVM' relates to another project for construction of Paddy market complex at Mattuthavani in Madurai and not to the aforesaid project. The noticee has stated in his reply that he had paid the service tax amount of ₹ 62,18,641 on the gross value of ₹ 15,76,29,834/- shown in the Show Cause Notice. The Commissioner has appropriated the amount of ₹ 62,18,641/- towards the aforesaid tax liability. However, the demand of service tax of ₹ 62,18,641/- relating to this project has neither been confirmed nor been included in the total demand of service tax of ₹ 2,52,28,175/-. The Commissioner ought to have confirmed the demand of service tax in respect of the above project and should not have ordered for appropriation of ₹ 62,18,641/- from the demand of service tax confirmed of ₹ 2,52,28,175/-; (vii) Regarding services pertaining to para 3.01 (25) [MOSERBEAR SEZ] of the Show Cause Notice dated 20.10.2009, the demand of service tax has been dropped on the ground that the services were rendered to a unit registered with a Special Economic Zone and thus exempted from payment of service tax vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under Government projects is not a commercial activity and will not be chargeable to service tax. The work undertaken in the aforesaid project is however not for construction of a canal system and is a composite project for supply of water to Madurai Municipal Corporation. In a similar case involving M/s. Indian Hume Pipe Co. Ltd., the Department has filed an appeal before the Hon'ble High Court of Madras against CESTAT Final Order No. 743/2008 dated 23.07.2008, which is still pending. Hence, dropping of the demand on the ground that there is no commercial activity in the water distribution system to the public is not proper. 7. In response to Ld. AR's submission that stadiums are very often given for rent such as for use in public function, organizing major events, etc., and hence can only be considered as a commercial activity, Ld. Advocate contended that the same has been considered by the Tribunal in the case of M/s. B.G. Shirke Construction Technology Pvt. Ltd. Vs. C.C.E., Pune-III - 2014 (33) S.T.R. 77 (Tri. - Mum.). He submitted that there are other decisions also on this aspect, namely: Commissioner of Service Tax-VII Vs. M/s. S.M. Sai Construction - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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