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TMI Blog2019 (5) TMI 1814X X X X Extracts X X X X X X X X Extracts X X X X ..... on such work orders. However, the appellant also supplied cranes and mobilized/transported labour for parties under different work orders. According to the appellant, these activities of supply of cranes and mobilization/transportation of labour are independent activities not related at all to the work orders under which the appellant performed the activity of erection and installation of plants. The appellant also claims that for these separate work orders issued for supply of cranes and mobilization/transport of labour, separate invoices were issued and since such services were not taxable, the appellant reflected the same as "exempted" in the ST-3 Returns filed by it. The appellant further claims that on introduction of a separate category of service for supply of tangible goods under Section 65(105)(zzzzj) of the Finance Act, 1994 [The Act] with effect from 16 May, 2008, the appellant started to discharge Service Tax liability on the income received from the supply of cranes. 3. However, on scrutiny of the records, the audit wing of the Central Excise Commissionerate, Jaipur-II for the period April, 2007 to March, 2008, found that :- (i) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id amount realized separately and not included in the value of taxable services declared to the department comes to Rs. 76,20,415/- which is recoverable from the assessee along with interest. 5. A show cause notice accordingly directed the appellant to show cause within 30 days as to why : "(i) Service Tax of Rs. 76,20,415/- should not be recovered from them under proviso to Section 73(1) of the Finance Act, 1994. (ii) Interest at the prevailing rates should not be recovered from them on Service Tax of Rs. 76,20,415/- under Section 75 of the Act ibid. (iii) Penalty should not be imposed upon them for short payment of Service Tax under provisions of Section 76 and Section 78 of the Finance Act, 1994." 6. The appellant filed a detailed reply denying the allegations and stated that it had not paid/short paid Service Tax amounting to Rs. 76,20,415/-. It was specifically stated that though it was doing the job of fabrication and erection for which specific work orders were issued, but in case a client required some other activity to be performed not connected with the main work order, then separate work orders were issued for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ST-3 return does not mean that it has not suppressed the fact and no demand can be issued on the same after a period of one year. In fact, the assessee has to show the correct status of the amount. The assessee in the ST-3 return has misstated the fact by showing the amount of Rs. 5,50,83,066/- as exempted service. Hence, the demand for including the amount of Rs. 5,50,83,066/- has correctly been issued. 8. The Commissioner, therefore, passed the following order :- "(1) I confirm the demand of Service Tax amounting to Rs. 75,04,288/- against M/s. Hazi A.P. Bava & Co. Plot No. 8, Road No. 3, Jain Colony, New Bhupalpura, Udaipur and order for recovery of the same from them under proviso to Section 73(1) of the Finance Act, 1994. (2) I order for recovery of interest on Rs. 75,04,288/- at the prevailing rates from M/s. Hazi A.P. Bava & Co. Plot No. 8, Road No. 3, Jain Colony, New Bhupalpura, Udaipur under Section 75 of the Finance Act, 1994. (3) I impose a penalty of Rs. 100/- per day up to 17-4-2006 and w.e.f. 18-4-2006 Rs. 200/- per day for the period during which such failure contained at the rate of 2% of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s; (iii) The confirmation of demand is based on Rule 5(1) of the 2006 Rules which has been struck down by the Delhi High Court in Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India [2013 (29) S.T.R. 9 (Del.)] which decision was subsequently confirmed by the Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (10) G.S.T.L. 401 (S.C.)]; (iv) The appellant had not suppressed any fact with an intent to evade payment of Service Tax since the appellant was under a bona fide belief that the income from independent activity cannot be taxed; (v) The appellant had reflected the said income in the ST-3 Returns with a declaration that it was exempted. This would adequately show that the appellant had no intention to evade the payment of Service Tax nor any fact was suppressed with a mala fide intention; and (vi) For similar reasons the penalty could not have been imposed upon the appellant. 10. The Learned Authorised Representative of the Department has, however, supported the impugned order and has submitted that in the absence of any record to substantiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cap. Telescopic Mobile Crane with 48 Mtrs. Boom/5 Mtr Fly Jib for use at JK Lakshmi cement Ltd., Jaykaypuram (Raj.). Ref. : Your offer dated 17-8-2007. Dear Sir, With reference to above, please refer discussions with our GM (Materials) at HO on 20-8-2007, accordingly we are pleased to place our order for hiring of above crane for use at our Plant at Jaykaypuram, Distt. Sirohi, Rajasthan on the following terms & conditions :-" 16. On record, at Page 79 of the paper book is another work order dated 11 July, 2007 issued by M/s. Binani Cement for supply of cranes and it is as follows :- "Sub. : Hiring of Latticed boom and Hydraulic telescopic boom cranes for shifting of equipment and fabricated steel structure for our expansion project at Binani Cement Ltd. P.O. Binanigram, Tehsil Pindwara, Distt. Sirohi (Raj.) Ref. : (a) Our mail dated 19-2-2007, 22-2-2007 letters BCL/Unit-II/06-07, dated 2-3-2007, BCL/Unit-II/06-07/984, dated 24-3-2007 and BCL/Unit-II/06-07/1003, dated 28-3-2007. (b) Your mail HAPBCO/BCL-II/07, dated 21-2-2007 along with crane offer and HAPB/UDR/BCL/1220/07-08, dated 26-3-2007 Dear Sirs, As per your discussion with us at site, mails and let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acing reliance upon Rule 5(1) of the 2006 Rules. This Rule 5(1) was struck down by the Delhi High Court in Intercontinental Consultants which was ultimately upheld by the Supreme Court. 22. The submission of Learned Counsel for the appellant is that the amount received for supply of cranes/mobilization of labour cannot be treated as a consideration for the provision of service under the works contract for erection of plant in terms of Section 67 of the Act. 23. This Section 67 of the Act deals with valuation of taxable services for charging Service Tax. Sub-section (1) of Section 67 provides that where Service Tax is chargeable on any taxable service with reference to its value, then such value shall where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by the service provider. It is, therefore, clear that only such amount is subject to Service Tax which represents consideration for provision of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax. 24. Section 67 of the Act was considered and exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered. The Supreme Court noted that Rule 5 does bring within its sweep the expenses which are incurred while rendering the service and are reimbursed and, therefore, what was required to be decided was whether Section 67 of the Act permits subordinate legislation to be enacted as done by Rule 5. It needs to be noted that prior to 19 April, 2006, in the absence of a Rule, the valuation was required to be done as per the provisions of Section 67 of the Act. The Supreme Court noticed that the charging Section 66 provides that there shall be levied Service Tax @ 12% of the value of taxable services referred to in the sub-clauses of Section 65 and collected in such manner 14 may be prescribed. Thus, the Service Tax is on the "value of taxable services" and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the Service Tax. It is for this reason that the Supreme Court observed that the expression "such" occurring in Section 67 of the Act assumes importance. It is in this context that the Supreme Court in paragraph 26 observed that the authority has to find what is the gross amount charged for providing "suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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