TMI Blog2020 (8) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... ract under the Finance Act prior to 01.06.2007 when Section 65 (105) (zzzza) was introduced in the Finance Act providing for bifurcation of a composite contract and taxing of the service element - The law was finally settled in August, 2015 by Hon‟ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] whereby it was held that in the cases of composite contract involving labour and materials, the same are not taxable under the existing category of services prior to 01.06.2007. It was further held that the service in such cases is classifiable only under the heads Works Contract Service‟ and tax leviable w.e.f. 01.06.2007 (and not pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 01.06.2007 - appeal allowed by way of remand. - Service Tax Appeal No. 00903 of 2011 - FINAL ORDER NO. 20408/2020 - Dated:- 10-8-2020 - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri V. Unnikrishnan, Consultant for the appellant Smt. C. V. Savitha, Superintendent (Authorised Representative) for the respondent ORDER The appellant is engaged in civil construction along with supply of materials which is classifiable under the category of Works Contract Service‟, which category was introduced w.e.f. 01.06.2007. The main dispute in this appeal is with regard to the method of computation of tax liability. The disputed period is 16.06.2005 to 31.03.2009. 2. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling abatement from gross receipt @ 67% (for material component) under Notification No. 18/2005-ST read with subsequent Notification no. 1/2006-ST, as is evident from the worksheet submitted; as the value of cement and steel supplied by the principal of the appellant have not been considered in the gross consideration; accordingly, appellant has wrongly availed abatement @ 67%; same is accepted for contract with Muthoot Builders for Kanyakumari project.Accordingly, a show cause notice dated 04.12.2009, invoking the extended period of limitation, was issued; it was alleged that the appellant have not paid / short paid service tax due to erroneous calculation; SCN proposed to demand service tax, denying abatement with respect to all the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant had not included the value of free supply of steel and cement by some of the clients.; impugned order allowed 67% abatement only in respect of one project at Kanyakumari of Muthoot Builders TVM‟, where the full material was supplied by appellant as per contract.; in all other cases, tax was demanded on the full amount received; appellant had not paid tax on the construction of a club building at Kollam not being used as a commercial or business purpose; the liability₹ 1,23,683 is admitted (i.e. 2007-200817,978 plus 2008-09 ₹ 1,05,885); Similarly, the tax liability of ₹ 1,59,319 (2006-07 ₹ 78,608, 2007-08, ₹ 66,335 and 2008-09 ₹ 14,376) on Kanyakumari project allowing 67% abatement, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the tax is to be recalculated including the value of omitted club, applying abatement of 67% for all, including ongoing projects, and works contract composition valuation/ rate for new projects after 01.06.2007; total demand would come to ₹ 64,98,218; appellant had made a pre deposit of ₹ 12 lakhs on 26.11.2011 as per the Tribunal stay order dated 18.10.2011; after adjusting the dues, appellant would be eligible for a refund of ₹ 4,03,201. 5. Learned AR for Revenue relies on the impugned order. 6. Having considered the rival contentions, we find that when the impugned order was passed, the law was not settled as regards classification of service, particularly in the case of composite contract involving supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials being cement, steel and plasticizer / water proof compound. In such cases, the appellant shall be entitled to deduction of material component actually supplied by them in execution of the works contract, which is verifiable from their sales tax record/ assessment order. As regards construction of club, it is held that the same is exempt from service tax being non-commercial in nature. 8. We find that the issue involved is of interpretation in nature and there was lot of confusion prevailing with respect to taxability of works contract, and law was settled finally in August, 2015. Therefore, we find that penalty under Section 76 and 78 are not sustainable and are liable to be set aside. Accordingly, we set aside the same. 9. We fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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