TMI Blog2021 (6) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... - decided in favor of appellant. - Service Tax ROM Application No. 85463 of 2020 In Service Tax Appeal No. 85950 of 2019, Service Tax ROM Application No. 85464 of 2020 In Service Tax Appeal No. 87366 of 2019, Service Tax ROM Application No. 85465 of 2020 In Service Tax Appeal No. 855 - A/86100-86102/2020 - Dated:- 15-12-2020 - DR. D.M. MISRA, MEMBER (JUDICIAL) AND MR. C.J. MATHEW, MEMBER (TECHNICAL) Shri Prasad Paranjape, Advocate for the Appellant Shri Nitin M Tagade, DC, Auth. Representative for the Respondent ORDER Heard both sides. 2. These miscellaneous applications are filed seeking rectification of mistake in the order of this Tribunal dated 26.11.2020. 3. Learned Advocate for the appellant submits that they have filed the applications seeking early hearing of the appeals on the ground that the issue has been covered by the earlier decision of this Tribunal. However, when the order was passed, the same indicated that appeals are disposed of under SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019. He submits that this is a typographical error, hence the same may be rectified and their early hearing application may be disposed and appeal be he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therein did exist under other entries in section 65 (105) of Finance Act, 1994 from an earlier date. It was, therefore, held that the entries existing independently till then, and simultaneously thereafter, was limited to taxing of the service simpliciter. The foundation for this distinction is the exclusion of tax by the Union on deemed sale in composite contracts and the legislated facility for vivisection of such composite contracts being available only after incorporation of works contract service in the taxing entries under Finance Act, 1994. Implicitly, the absence of such facility in relation to other services, under the enumeration regime and the negative list of regime, would exclude composite contracts that included such taxable service within it. A perusal of 15. A reading of this judgment, on which counsel for the assessees heavily relied, would go to show that the separation of the value of goods contained in the execution of a works contract will have to be determined by working from the value of the entire works contract and deducting therefrom charges towards labour and services. Such deductions are stated by the Constitution Bench to be eight in number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... world of commerce and law as such, and has to be taxed separately as such. In Gannon Dunkerley, 1959 SCR 379, this Court recognized works contracts as a separate species of contract as follows :- To avoid misconception, it must be stated that the above conclusion has reference to works contracts, which are entire and indivisible, as the contracts of the respondents have been held by the learned Judges of the Court below to be. The several forms which such kinds of contracts can assume are set out in Hudson on Building Contracts, at p. 165. It is possible that the parties might enter into distinct and separate contracts, one for the transfer of materials for money consideration, and the other for payment of remuneration for services and for work done. In such a case, there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agreement to sell, from the agreement to do work and render service and to impose a tax thereon cannot be questioned, and will stand untouched by the present judgment. (at page 427) xxxxx 26. We have already seen that Rule 2(A) framed pursuant to this power has followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ath. 12. On behalf of the appellant, it is contended that the rendering of management, maintenance or repair service were composite transactions. The disinclination of the adjudicating authority to exclude the goods element merely because of failure to furnish evidence of discharge of VAT liability on those transactions in goods discounts any challenge to the contention now made. Furthermore, as submitted by Learned Counsel, the decision of the Hon ble Supreme Court, in Safety Retreading Company (Private) Ltd v. Commissioner of Central Excise [2017-TIOL-28-SC-ST], has held that management, maintenance or repair services are also works contracts. The appellant has been transacting in works contracts and, in terms of the jurisdictional competence, the tax liability is limited to the admitted service element therein. There is no dispute that the liability thereof has been discharged. The inclusion of the goods that were liable to tax under the VAT laws of the state concerned in the value of services rendered by the appellant lacks the backing of law and must be set aside. 13. We now turn to the issue of consumables supplied by the recipients to enable the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 value of taxable services provided by the service provider. xxxxx 18. In the first instance, no material is produced before us to justify that aforesaid basis of the formula was adopted while issuing the notification. In the absence of any such material, it would be anybody s guess as to what went in the mind of the Central Government in issuing these notifications and prescribing the service tax to be calculated on a value which is equivalent to 33% of the gross amount. Secondly, the language itself demolishes the argument of the Learned Counsel for the Revenue as it says 33% of the gross amount charged from any person by such co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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