TMI Blog2023 (5) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 is not sustainable. The appellant has admitted that the services rendered by them are taxable under works contract service with effect from 01.06.2007 in the grounds-of-appeal and also before the lower authority. As the activities undertaken by the appellant were in the nature of works contract, the demands raised under construction service and commercial or industrial construction service till 31.05.2007 are not sustainable - the appellant is required to pay Service Tax of Rs.7,94,122/-, as indicated in the letter extracted hereinabove, towards works contract service during the period from 01.06.2007 to March 2009 and towards the cleaning activity undertaken by them during the period from April 2005 to March 2009. Extended period of limitation - HELD THAT:- The appellant has not taken registration, and have not paid Service Tax on the considerations received for the services rendered to M/s. BSNL, CPWD, National Institute of Technology, etc. The non-payment of Service Tax by the appellant has been detected and investigated by the Anti-evasion Unit of the Commissionerate and as such, the extended period has been rightly invoked in this case. Thus, the demand of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Act, 1994 and also proposing to impose penalties under Sections 76, 77 and 78 of the Act. 4. The Joint Commissioner of Central Excise and Service Tax, Tiruchirappalli held that the services rendered by the assessee would fall under the category of construction service under Section 65(30a) of the Finance Act, 1994 with effect from April 2005, under commercial or industrial construction service under Section 65(25b) of the Finance Act with effect from 16.06.2005 and under works contract service under Section 65(105)(zzzza) of the Finance Act with effect from 01.06.2007 and consequently, vide Order-in-Original No. 43/2010-ST dated 28.12.2010, has confirmed the above demands of Service tax and imposed a penalty of Rs. 5,000/- under Section 77 of the Act and also a penalty of Rs.8,70,873/- under Section 78 of the Act. 5. The lower appellate authority has upheld the Order-in-Original vide Order-in-Appeal No. 107/2011 dated 18.10.2011, which is impugned herein. 6. We have heard Shri A.K. Jayaraj, Learned Advocate representing the appellant and Shri R. Rajaraman, Learned Authorized Representative appearing for the Revenue. 7.1 The Learned Advocate appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration, had neither paid any Service Tax nor filed their Service Tax returns till the time investigation was taken up by the Department and that the services rendered by the appellant would be taxable under construction service under Section 65(30a) of the Finance Act, 1994 with effect from 10.09.2004, under commercial or industrial construction service under Section 65(25b) with effect from 16.06.2005 and under works contract service under Section 65(105)(zzzza) with effect from 01.06.2007. 8.2 He has also contended that the levy of Service Tax on construction service was introduced with effect from 10.09.2004 and the appellant have been providing taxable services, had received payments during the period from April 2005 to March 2009 for such taxable services provided, but had not paid the Service Tax, did not follow the procedures laid down for payment of Service Tax nor filed their turns, with an intention to evade payment of Service Tax. So, he has argued that the demands raised and penalties imposed are justified. 9. We have considered the submissions made by both sides and perused the records, as available. 10. The issues that arise for decision in this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams; 13. The definition of works contract as contained in Section 65(105)(zzzza) of the Finance Act, 1994 with effect from 01.06.2007 reads as under: - (zzzza) to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. For the purposes of this sub-clause, works contract means a contract wherein, (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, (a) erection, commissioning or installation of plant, machinery, equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such service portion has been prescribed vide Rule 2A of the Service Tax (Determination of Value) Rules, 2006, framed under Section 94 (2) of the Act. An alternative in the form of Works Contract (Composition scheme for payment of Service Tax) Rules, 2007 has also been introduced to pay service tax at a lesser rate on the gross amount (including the value of transfer of property in goods). 3.5 The issue as to whether a composite contract involving provision of service as well as transfer of property in goods could be covered under CICS and CCS from the date of introduction of service tax levy on such services was, being litigated upon which was finally settled by the Hon ble Supreme Court in the case of CCE Vs. Larsen Toubro Ltd. 2015 (39) STR 913 SC. The Apex Court has observed that in as much as section 67 of the Act, dealing with valuation of taxable services, refers to the gross amount charged for service, the services of CICS and CCS would cover only pure service activities, as any contrary view would imply that the Union Government can levy service tax on the gross amount, including the value of transfer of property in goods also, which is constitutionally impermissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty in goods (Example:- Where all materials required for the construction are supplied by the service recipient and the service provider is engaged only for provision of construction service), a composite construction activity would fall only under WCS. . . .. . 8. In the light of the discussions, findings and conclusions above and in particular, relying on the ratios of the case laws cited supra, we hold as under: - a. The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service in the light of the Hon ble Supreme Court judgment in Larsen Toubro (supra) upto 1.6.2007 b. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service under Section 65(105)(zzzh) ibid, Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. c. For activities of construction of new bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of this specific decision and the admitted claim of the appellant that they are not providers of commercial or industrial construction service but of works contract service , no tax is liable on construction contracts executed prior to 1st June, 2007. 11. Insofar as demand for subsequent period till 30th September, 2008 is concerned, it is seen that neither of the two show cause notices adduce to leviability of tax for rendering works contract service . On the contrary, the submission of the appellant that they had been providing works contract service had been rejected by the adjudicating authority. Therefore, even as the services rendered by them are taxable for the period from 1st June, 2007 to 30th September, 2008 the narrow confines of the show cause notices do not permit confirmation of demand of tax on any service other than commercial or industrial construction service . It is already established in the aforesaid judgment of the Hon ble Supreme Court that the entry under Section 65(105)(zzd) is liable to be invoked only for construction simpliciter. Therefore, there is no scope for vivisection to isolate the service component of the contract. 15.1 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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