TMI Blog2023 (7) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there is no immunity to the sub-contractors from levy of Service Tax when taxable services are provided by them. The benefit of Notification No. 1/2006-ST dated 01.03.2006 and Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was not extended in computation of Service Tax payable apparently as the appellant has not included the value of the materials supplied by its customers to arrive at the gross value of the services rendered. One of the important conditions that has to be satisfied to be eligible for the abatement of the above Notification and the benefit of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 is that the gross value of the services provided shall include the value of goods and materials supplied or provided or used for providing taxable service by the service provider - To be eligible for abatement under Notification No. 1/2006-ST dated 01.03.2006, it is essential that the value of free supply materials by the developer/main contractor, have to be included to arrive at the gross value of services or else computation of tax on contract receipts is as per the law, since the conditions of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Finance Act, 1994 on the Service Tax demanded and also imposed penalties under Section 77 and Section 78 of the Finance Act, 1994. The Order also appropriated the Service Tax of Rs.21,00,000/- paid by the assessee. 3. The facts in brief in these appeals are that the Revenue noticed during the course of audit of accounts of the assessee that the appellants have collected Service Tax on the taxable value but did not pay to the credit of government on the construction services provided. Investigation conducted revealed that the appellants undertook construction of commercial and residential buildings and construction charges were received and accounted as income from contract receipts . The appellants have not filed Service Tax returns for more than five years i.e. from March 2006 onwards. Construction materials such as cement, steel etc., were supplied by the customers free of cost for construction service provided by the appellants, but did not include the value of such free supply materials to arrive at the gross receipts though they have availed the abatement provided under Notification No. 1/2006-ST dated 01.03.2006 and also concessional rate of duty as prescribed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Payment of Service Tax) Rules, 2007 though materials value was included. 5.1 The Ld. adjudicating authority have found the appellant s contentions as not correct and not justifiable since as early as on 10.09.2004, i.e, at the time of imposition of levy on commercial construction service, the Ministry vide para 13.1 of F.No.B2/8/2004-TRU dated 10.09.2004 has clarified that contractor is liable to pay Service Tax for the services provided to real estate owners as given below:- 13. Construction Service (Commercial and Industrial Buildings or Civil Structures) 13.1 .Estate builders who construct buildings/civil structures for themselves (for their own use renting it out or for selling it subsequently) are not taxable service providers. However, if such real estate owners hire contractor/contractors, the payment made to such contractors would be subjected to service tax under this Head. The tax is limited only in case the service is provided by a commercial concern. 5.2 The adjudicating authority has also relied on the Ministry letter vide F.No. 332/35/2006-TRU dated 01.08.2006 which has clarified that the contractors/sub-contractors are liable to pay Service Tax fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority has commented that this circular was issued in connection with Goods Transport Agency Service, which is given below:- 5.7 If service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same amount from any other person, to avoid double taxation. would not be relevant to finally determine the tax liability of the sub-contractor on construction service. 5.5 It is seen from the above clarification that if service tax on transportation of a consignment is paid, then the same should not be charged again from any other person. The above clarification cannot be interpreted to mean that sub-contractor is not liable to pay service tax as in the case of GTA Service, Tax is payable on the freight charges paid to GTA either by consignee or consignor and therefore the Board has clarified that service tax should be charged from only one person. Whereas in the case of construction service, as already pointed out, specific clarifications were issued by Board during 2004, 2006 and 2007 that sub-contractors are liable to pay service tax and these clarifications will prevail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid by a sub-broker if there is integrity between the services. Therefore, tax paid by a sub-broker may not be denied to be set off against ultimate service tax liability of the stock broker if the stock broker is made liable to service tax for the self same transaction. Such set off depends on the facts and circumstances of each case and subject to verification of evidence as well as rules made under the law w.e.f. 10-9-2004. No set off is permissible prior to this date when sub broker was not within the fold of law during that period. In the case of Safe Sure Marine Services P Ltd. Vs. CST, Mumbai [2012 (28) STR 30 (Tri. Mumbai)], the Tribunal held that, 5.3 The appellant has also argued that as far as M/s. SICAL is concerned, after 1-5-2006 M/s. SICAL has discharged the Service Tax liability on the entire amount and, therefore, they are not required to pay Service Tax as they are only sub-contractors. This argument is totally incorrect especially in the context of a Value Added Tax regime, which is in force in India. Under the Value Added Tax regime, which applies to Service Tax also, the provider of taxable services has to discharge the Service Tax liability an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. 9. On the issue of invoking extended period of limitation, the adjudicating authority has recorded his findings as follows:- (i) The assessee provided construction service in respect of both commercial and residential projects and for the period covered in the notices from 2006-2007 had paid Service Tax of Rs.55,41,139/- on their own prior to initiating investigation. It was noticed that they had not paid Service Tax in many commercial projects and all their residential projects and only after initiation of investigation, the fact of non-payment of Service Tax on many of their commercial projects and all their residential projects right from 2006-2007 onwards came to light. (ii) Further, it was noticed that the assessee had not filed the ST-3 returns for the entire period of demand covered from March 2006 to March 2010. (iii) The fact of providing taxable services was suppressed by the assessee as they have not made any payment of Service Tax for various residential projects right from 2006-2007 and they have stopped payment of Service Tax after their initial payment though they bagged various orders which are liable to Service Tax under Commercial or Industrial C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 and (iii) Whether invocation of extended period for the demand of Service Tax is justified. 14. We find that the appellant has executed construction works as a contractor/sub-contractor during the impugned period of the notices and consideration received for their services was accounted as contract receipts in their financial statements. In many contracts executed, as investigation has revealed, materials like cement, steel, etc., were supplied by the customers of the appellant. On the scrutiny of the Show Cause Notices and the Order-in-Original and related appeal papers indicate that the contracts entered into are contracts simpliciter. 15. We find that contractors/sub-contractors are liable for payment of Service Tax as held in the case of Sew Construction Limited Vs. CCE, Raipur [2011 (22) STR 666 (Tri.-Del.)], wherein in the CESTAT, Delhi Bench has held that there is no immunity to the sub-contractors from levy of Service Tax when taxable services are provided by them. (as referred to in paragraph 6 of this order). We concur with the reasoned findings of the Ld. adjudicating authority. 16. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority. 17. We find that the appellant have relied upon the decision in the case of Commissioner of Service Tax Vs. Bhayana Builders (P) Ltd. [2018 (10) GSTL 118 (S.C)] wherein it was held that the value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service being neither monetary or non-monetary consideration paid by or flowing from the service recipient accruing to the benefit of service provider would be outside the taxable value or the gross amount charged within the meaning of later expression in Section 67 of the Finance Act, 1994. However, in these appeals Service tax was not demanded on the value of free materials supplied but only on contract receipts . The issue involved in this dispute is determination of availability of the benefit of Notification No.1/2006-ST dated 01.03.2006 and also of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. The appellant has also referred to the decisions rendered in the case of Real Value Promoters Pvt. Ltd. Vs. Commissioner of GST Central Excise, Chennai Final Order Nos. 42436-42438/2018 dated 18.09.2018 and in the case of Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g larger period of limitation. The burden to prove the defence of bonafides was on the assessee and the assessee in this case has failed to prove its bonafides. Under modvat, excisable finished products made out of duty-paid inputs are given relief of excise duty to the extent of duty paid on inputs. In the circumstances, we are satisfied that the department was justified in invoking the extended period of limitation under the proviso to Section 11A(1). The Tribunal, Mumbai in the decision rendered in the case of Bharat Automotive Pressings (I) Pvt. Ltd. Vs. Commissioner of Central Excise, Pune reported in 2010 (262) ELT 720 (Tri. Mum.) has observed at paragraphs 5 and 6, as under:- 5. We have considered these submissions also. Though we are not impressed with the submissions relating to the test audit , we are not in a position to ignore the submission of the ld. SDR that the appellant continued to exclude the amortized cost of moulds from the assessable value of the goods supplied to Telco even after the Tribunal s decision in Flex Industries case (1997), which was to the effect that such cost was liable to be included in the assessable value of the goods. A contra dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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