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TMI Blog2020 (8) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appellant is Proprietor of M/s Align Builders engaged mainly in construction of residential buildings for Developers (service receivers).They are assessed to sales tax -VAT with respect to supply of materials in execution of works contract; the appellant had taken service tax registration under the category - "Construction of Complex Service‟. It appeared to Revenue that the appellant is not paying service tax and accordingly the Proprietor was summoned and also required to submit details of payments received from the service receivers.Proprietor of K. G. Prathapa Simhan, in his statement r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot paid / short paid service tax due to erroneous calculation; SCN proposed to demand service tax, denying abatement with respect to all the other projects except Kanyakumari project from Muthoot Builders, of Rs. 2,00,09,070+ Cess Rs. 4,02,513+ Rs. 1,54,505; to appropriate amount of Rs. 49,32,158 + Rs. 98,561+ Rs. 49,281 and proposing to demand interest and penalty under Section 76, 77 and 78 of the Act. 2.2. The show cause notice was adjudicated on contest vide impugned order-in-original dated 11.01.2011 confirming the amount of Rs. 1,99,82,670/- + Cess Rs. 4,01,985/- + Rs. 1,54,505/-, after allowing abatement for Rs. 8 lakhs being the value of taxable service rendered during first year of commencement (2004-005); appropriating amount alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14,376) on Kanyakumari project allowing 67% abatement, is admitted; the issue of inclusion of free supply materials in the taxable value has been settled by Apex Court in Bhayana Builders case by the Apex court 2018 (10) GSTL 118 (SC)holding thatas per Section 67 the value of materials supplied "free of cost‟ by service recipient is not to be included in "gross amount charged‟ by the service provider.; free supply materials need not be added to taxable value, till the explanation was inserted under Section 67 w.e.f. 14.05.2015; * Even otherwise, as per new explanation inserted under Rule 3 of Works Contract (composition scheme for payment of service tax) Rules, 2007, total value involved in free supply materials was to be ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posite contract involving supply of both labour and material. Even different benches of this Tribunal were having difference of opinion with regard to taxability of works contract 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 of Central Excise & Customs, Kerala vs. L&T Limited -2015 (39) STR913 (SC)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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the same. 9. We further hold that appellant is not entitled to composition scheme as they have not opted for the same; secondly, they are disputing the addition of material components supplied free by the principal as required under the composition scheme; the details and actual cost of the material thus supplied needs to be arrived at. Further, composition scheme is optional at the option of the assessee. Accordingly, we allow this appeal by way of remand with the following directions: - (i) Service Tax liability shall be recomputed for the period from 01.06.2007 under Rule 2A of Service Tax (Determination of Value) Rules. (ii) No Service Tax is chargeable for the period prior to 01.06.2007 under the head "Works Contract Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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