TMI Blog2019 (4) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of free material supplied to the appellant in the gross value of services. The second finding recorded by the Commissioner is that the appellant should have discharged service tax @ 4.12% since this was the rate of tax when the payment was received and not 2.06% - This finding cannot also be sustained. The taxable event in relation to service tax is rendering of service and thus tax has to be levied at the rate prevailing during the period such service was provided and not the rate of tax that was prevailing at the time of the payment - thus, the demand confirmed by the Commissioner in the first two show cause notices deserves to be set aside. Third SCN - Demand of service tax proposed on the differential value calculated on comparing the gross amount as per the balance sheet and the gross amount as per ST-3 Returns - Held that:- The demand could not have been confirmed under “Commercial or Industrial Construction Service” for the reason that it was a composite contract and in the nature of “Works Contract Services” - The demand could not have been confirmed under “Commercial or Industrial Construction Service” in view of the decision of the Supreme Court in Larsen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Claimed Rate of Service Tax Service Tax (Incl. Cess) Sept. 04 to Mar. 05 10,06,74,224 10.20% 1,02,68,770 Apr 05 to Mar 06 28,46,31,509 10.20% 2,90,32,414 Apr 06 to Mar 07 60,08,71,661 12.24% 7,35,46,691 Apr 07 to Mar 08 17,04,85,038 12.36% 2,10,71,951 Total (A) 1,15,66,62,432 13,39,19,826 * Abatement was denied on the ground that cost of free material was included in the gross value of services and CENVAT Credit was availed on Input Services B. Demand under Works Contract Services Period Payment received under WCS Total Services tax payable (@ 4.12%) Service Tax paid @ 2.06% Balance Service Tax payable (2.06%) March, 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are issued as per Service Tax return Difference of Column (2-3) Rate of Service tax Service Tax short paid 2005-06 665,324,997 424,822,475 240,502,522 12.24% 29,473,509 2006-07 972,138,474 802,779,329 169,359,145 12.24% 20,729,559 2007-08 1,158,230,088 951,333,813 206,896,275 12.36% 25,572,380 2008-09 1,093,797,105 902,806,861 190,990,244 12.36% 23,606,394 2009-10* - - 238,737,806 10.30% 24,589,994 Total 3,88,94,90,664 3,08,17,42,478 1,04,64,85,991 12,39,35,836 * For the period 2009-10, the amount taken as per Best Judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 67 of the Act in view of the decision of the Supreme Court in Commissioner of Service Tax vs. Bhayana Builders (P) Ltd., reported in 2018 (10) GSTL 118 (SC).; and (iv) That the appellant had correctly discharged service tax @ 2.06% under Works Contract Services for the services rendered prior to Mach, 2008 but the Commissioner wrongly observed that the tax should be paid @ 4.12% for the reason that the payment was received after March, 2008. The taxable event in relation to service tax is with regard to rendering of services and not with regard to the date on which the payment is made in view of the decision of the Delhi High Court in the case of Commissioner of Service Tax vs. Ratan Singh Builders Pvt. Limited reported in 2014 (33) STR 242 (Del.) and Vistar Construction (P) Ltd., vs. Union of India reported in 2013 (31) STR 129 (Del.). 11. The learned Commissioner while dealing with the first two show cause notices observed that there was no dispute that the contract executed by the appellant involved both supply of material and provision of service and that the payment of service tax made prior to 01 June, 2007 was under Construction of Complex Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount charged given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term gross amount charged to enable the Department to ignore the contract value or the amount actually charged by the service provider to the service recipient for the service rendered. The fact that it is an inclusive definition and may not be exhaustive also does not lead to the conclusion that the contract value can be ignored and the value of free supply goods can be added over and above the contract value to arrive at the value of taxable services. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. The service recipient can use any quality of goods and the value of such goods can vary significantly. Such a value, has no bearing on the value of services provided by the service recipient. Thus, on first principle itself, a value which is not part of the contract between the service provider and the service recipient has no relevance in the determination of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Scheme for Payment of Service Tax) Rules, 2007. It is the case of the appellant that since the payments for the services rendered were received only after 1-3-2008, the applicable rate would be 4% and not 2%. Reliance was placed by the Revenue on the Ministry of Finance, Department of Revenue instruction dated 28-4-2008. 5. We may point out at this juncture itself that recently a similar issue had arisen in another set of cases before us. Those were decided on 23-1-2013 in W.P. (C) 5636/2010 entitled Vistar Construction Pvt. Ltd. v. Union of India Others and W.P. (C) 3632/2012 entitled Piyare Lal Hari Singh Builders Pvt. Ltd. v. Union of India Others [ 2013 (31) S.T.R. 129 (Del.)]. In that decision, the main controversy was with regard to the applicable rate of Service Tax in respect of works contract service. There also, the service had been rendered prior to 1-3-2008, but the payments were received after 1-3-2008. The revenue had placed reliance on the very same instruction dated 28-4- 2008 and, after going through the same, this Court held that the view expressed in the instruction was wrong. This Court had placed reliance on the Supreme Court decision in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1994, as amended. Section 91 read Section 95 of Finance Act (No. 2), 2004 Section 136 read with Section 140 of the Finance Act, 2007 in as much as they failed to pay Education Cess and Secondary and Higher Education Cess at the applicable rates. Thus the amount is recoverable and hence I hold the same. 19. The contention of the learned Counsel for the appellant is that the demand could not have been confirmed under Commercial or Industrial Construction Service for the reason that it was a composite contract and in the nature of Works Contract Services and for this submission, as noted above, reliance has been placed on the decision of the Supreme Court in Larsen Toubro Ltd., for the period 1 April, 2005 to 31 May, 2007. For the period after 1 June, 2007, it has been submitted that the service tax was required to be levied as per Rule 2A of Valuation Rules. 20. We find force in the submission advanced by the learned Counsel for the appellant. The demand could not have been confirmed under Commercial or Industrial Construction Service in view of the decision of the Supreme Court in Larsen Toubro Ltd., FOURTH SHOW CAUSE NOTICE 21. The fourth show c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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