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TMI Blog2019 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... 85% of the value of invoices and Service Tax on 20.15% of the remaining value. The Department was of the view that the appellant has to pay Service Tax on the gross amount received for completion and finishing services. 1.3 Though the appellant claimed that the value for the purposes of levy of Service Tax under Works Contract Service has to include the value pertaining to transfer of property in goods involved in the execution of Works Contract leviable to VAT/ Sales Tax, the Department was of the view that since the works are in the nature of finishing services, it did not involve transfer of proper in goods and was merely consuming the materials for providing the services; that such consumption did not amount to sale and therefore, the appellant is not entitled to exclude the material value. 1.4 After due process of law, the Original Authority confirmed the demand, interest and imposed penalty under Section 78 of the Finance Act, 1994. Aggrieved by such order, the appellant is now before the Tribunal. 2.1 Ld. Counsel Shri. G. Natarajan appeared and argued on behalf of the appellant. He submitted that the appellant has discharged Service Tax for the disputed period from Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the said Rules. That the Department has sought to confirm the demand by applying the Composition Scheme prior to 01.07.2012 and after 01.07.2012 by applying Rule 2A (ii) of the Rules. That the said calculation by the Department is unsustainable. The appellant has correctly discharged the VAT on the materials portion as per the VAT Law and for the remaining value, they have discharged Service Tax. 2.3.2 Ld. Counsel placed reliance on the decision in the case of M/s. Johnson Lifts Pvt. Ltd. Vs. Commissioner of Service Tax, Chennai reported in 2018-TIOL-1142-CESTAT-MAD wherein it was held that once VAT is paid on 85% of the gross value as per the Tamil Nadu VAT Rules, 2007, payment of Service Tax on the remaining 15%, which represents the service portion of works contract, is in order. 2.4 He submitted that the demand for the period from October 2008 to March 2013 has been raised in the Show Cause Notice dated 17.04.2014 invoking the extended period of limitation by alleging suppression of facts. That the issue is only with regard to the method that has to be adopted for determining the value of taxable service and is entirely an issue of interpretation. There is no intention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the allegation of the Department that there is no transfer of property in goods and that there is merely consumption of materials while providing the finishing services cannot sustain. 7.1 The second issue is with regard to the method of calculation in arriving at the value of taxable service for payment of Service Tax under Works Contract Service. For better appreciation, the relevant provisions prior to 01.07.2012 are noticed as under : ―2A. Determination of value of services involved in the execution of a works contract: (1) Subject to the provisions of section 67, the value of taxable service in relation to services involved in the execution of a works contract (hereinafter referred to as works contract service), referred to in sub-clause (zzzza) of clause (105) of section 65 of the Act, shall be determined by the service provider in the following manner:- (i) Value of works contract service determined shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract. Explanation.- For the purposes of this rule,- (a) gross amount charged for the works cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the service tax payable in the following manner, namely:- (A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent of the total amount charged for the works contract; (B) in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent of the total amount charged for the works contract; (C) in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property , service tax shall be payable on sixty per cent. of the total amount charged for the works contract;" 7.2 Perusal of these provisions, as shown above, would indicate that Rule 2A continues after 2012 also and the Composition Scheme has been replaced and inbuilt in the Rules itself in a different form whereby the service portion in Works Contract is specified at a percentage of gross value based on the nature of activities on which normal Service Tax rate applie ..... 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