TMI Blog2023 (10) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... or industry. Further, the main definition provided the exclusion of transport terminals. Further, it is found that from 01.07.2012 as admittedly the service was provided to Government or Government Corporations, the same are exempt under Clause No. 12 of Notification No. 25/2012-ST wherein clause A provides for exemption of services provided to Government, Local Authorities or Government Authorities in respect of a civil structure or other original work meant predominantly for used other than for commerce nature or any other business or profession. Construction done for Common Wealth Games 2010 - HELD THAT:- The same was an International Sporting Event and not a commercial activity. Accordingly, the same was exempt and not taxable. Construction done for Delhi University - HELD THAT:- The Learned Commissioner have erred in observing that the appellant could not prove that services for these purposes are non-commercial in nature. It is held that inclusion of the clause in the agreement that service tax if any has to be borne by the contractor/ service provider, does not alter in any way the provisions of service tax with respect to the tax liability. It is also found th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Larson Toubro [ 2015 (8) TMI 749 - SUPREME COURT ], Tribunal and the High Courts in several matters have held that the assessee are entitled to composition scheme, particularly in the case of Mehta Corporation Vs CCE, Jaipur [ 2014 (5) TMI 1131 - CESTAT NEW DELHI ]. Work executed for NG, Ranchi - HELD THAT:- So far the demand of tax with respect to the work executed for NG, Ranchi Rs. 7,04,639/- and Rs. 7,10,971/- is concerned, the same is set aside and allowed by way of remand. The appellant shall file fresh computation of tax for this work before the Adjudicating Authority. Same will be accordingly verified and in case any short fall is pointed out, the appellant shall deposit the same. Extended period of limitation - HELD THAT:- The extended period of limitation could not have been invoked, in the facts and circumstances, the appellant was registered with the Department and regularly filing their ST-III returns. Further, appellant maintains proper books of accounts which are subject to audit by the company auditor and also under tax audits. Further, whatever demands have been raised, has been raised based on the records maintained by the appellant and there is no m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14-DB 5,50,43,689/- 3 01.04.2012to 31.03.2013 O.R. No. 116/2014-Adjn (Commr) (ST) dated 07.05.2014 OIO No. HYD-EXCUS- 004-COM-035-15-16 dated 28.09.2015 ST/30015/ 2016-DB 5,16,93,652/- 4 01.04.2013to 30.09.2014 O. R. No. 48/2015- Adjn. (Commr.) (ST) dated 13.04.2015 1,43,51,917/- 2.2 The Appellant submits that the construction services provided by them during the material period involved in the above cases relates to the construction of Sports Stadia and associated facilities to the Common Wealth Games held in Delhi in 2010, the construction of godowns, sundry sheds and markets for the APMC Market and the construction of Transport Terminals for various state governments in the State of Karnataka, Kerala, and other states. The issue involved in the above Appeals is - whether the above said construction services would be liable to Service Tax during the impugned period or not. 3. Prior to 01.07.2012, as per the main part of the definition of Works Contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended for commerce or industry that service tax can be levied.Thus, it is only that construction which is to be used or primarily to be used for commerce that is subject to levy of service tax. 17. In the present facts, we find that dominant user of the sports complex is non- commercial. The definition uses the words used or to be used primarily for commerce or industry clearly indicating that the user is to be exclusively for commercial purpose or at least it must be primarily for commercial purpose. The definition leaves us in no manner of doubt that if the predominant user of the sports stadium is not commercial, then the same cannot be subjected to levy of service tax. . 3.1 Post 01.07.2012, the construction services provided by the Appellant comes within ambit of works contract as defined under section 65B(54) of Finance Act, 1994. However, Notification No. 25/2012-ST, dated 20.06.2012 in vide clause 12(a) provides for exemption if - a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession. This means, if a construction of a civil structure is not meant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try), by any stretch of imagination and are thus excluded from the ambit of works contract service under Section 65(105)(zzzza) of Finance Act, 1994 and no Service tax liability arises. In any case, the Department has not produced any contrary evidence to this effect, neither in Show Cause Notice nor in Order-in-Original. 4.3 Another objection raised is that the Letter of Intent dated 04.08.2008 issued by M/s Engineers India Ltd., the Project Consultants to Delhi University, mentioned that the contracted price is inclusive of Service tax. It is not uncommon in a tender process calling for bids, the contracted price quoted is inclusive of taxes, if any, as an abundant precaution. Merely because such a clause exists, it would not mean that the Service tax has to be charged and collected from the service recipient, irrespective of the fact that such levy exists or not for such service activity. Since the Appellant were clearly conscious of the fact that the construction services for Common Wealth Games infrastructure is outside the purview of levy of Service tax. It is not the case of the Department in the present proceedings, that the Appellant has charged and collected Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the clear exclusion of the construction services in respect of transport terminals from the definition of works contract service , there cannot be any levy of Service tax at all, prior to 01.07.2012. 5.3 For the period post 17.2012, Clause 13(a) of Notification No. 25/2012- ST dated 30.06.2012 clearly exempt construction of transport terminals from payment of Service tax, which reads as follows: 13. Services provided by way ofconstruction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- a. a road, bridge, tunnel, or terminal for road transportation for use by general public; 5.4 The Appellant also submits, the construction of transport terminals are also exempted in terms Clause 12(c) of Notification No. 25/2012-ST since the Appellant satisfy both the conditions of the said clause i.e., (i) the services provided to Government, a local authority or a governmental authority by way of construction of a civil structure or any other original works and such service is (ii) meant predominantly for use other than for commerce, industry, or any other business or profession. In the instant case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is related to sub-clause (ii) of Clause 2(s) alone. The clause (i) is followed by ; and the word or . Therefore, each of the sub-clauses is independent provision. The condition of 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is relatable to only sub-clause (ii) of Clause 2(s). It means that an authority established by Government should have 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution to be eligible for exemption. The Authority set up by an Act of Parliament or State Legislature is not and cannot be made subject to the condition of 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution. Thus, the construction activity undertaken by the petitioner in respect of the academic block of the Institute-Respondent No. 4, is exempt from payment of service tax in terms of Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of Inter Model Transit Centre (IMTC) built by KSRTC, from the CBEC. The Board vide their letter in F. No. 137/93/2009-CX.4 dated 07.01.2010, clarified that they shall be classified by the essential characteristics of the construction. It further clarified that, prima facie, the construction of transport terminal by KSRTC could not be for commerce irrespective of the revenue that would be generated from its operations and therefore held, it is the transport terminal that gives its essential operations. Further, it was also clarified that it is a question of fact that must be decided by the adjudicating authority as to whether the building is a transport terminal OR only a construction to facilitate customer to come to the commercial complex. In the instant case, it is the former in as much as the building is primarily a transport terminal and not a commercial complex for customers, for example a mall. 5.7 In view of the above, it is submitted that the construction of Transport Terminals falls under exclusion in the main part of the definition of works contract as defined under Section 65(105)(zzzza) of the Act and are also not meant primarily for the purpose of commerce and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin clause (b) of explanation (ii) to the said Section, i.e., construction services meant primarily for the purposes of commerce and industry. Reference is invited to the decision of the Hon ble Tribunal, Mumbai in the case of A.B. Projects Pvt. Ltd. Vs. Commissioner of Central Excise, Nagpur [2017 (5) G.S.T.L. 195 (Tri. - Mumbai)], wherein it was held that the construction for APMC for market stalls are not commercial in nature and reads as follows: 4. We have gone through the rival submissions. We find that Hon ble High Court in appellant s own case has held that APMC is constituted for charitable purposes. In this regard the C.B.E. C. Circular No. 157/8/2012-S.T., dated 27-4-2012 and Circular No. 80/10/2004-S.T., dated 17-9-2004 which are reproduced below: Circular No. 157/8/2012-S.T., dated 27-4-2012 4. When examined with reference to its constitution and functions, the services provided by APMC out of the market fee collected from the licensees, do not appropriately fall under the category of BSS. The distinction between BSS and BAS is explained in the instructions dated 28-2-2006 issued from F.No. 334/4/2006-TRU. In the light of the above instruction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects. Under the impugned order the benefit of abatement under Notification No. 1/2006-ST dated 1.3.2006 [Service tax shall be calculated on a value equivalent to 33% of the gross amount charged) was rejected erroneously on the ground that the Appellant have taken Cenvat credit of duty on inputs/capital goods and Cenvat credit on input services were taken, and differential tax demand of Rs. 99,72,000/- (from October 2011 to June 2012) was confirmed under the impugned order, in terms of Rule 2A of Service Tax (Determination of Value) Rules, 2007, completely ignoring the evidence filed before him, that the Cenvat credit taken inadvertently was already reversed along with interest and was also informed to the jurisdictional Commissioner vide letter dated 05.02.2013 and obtained acknowledgement. This clearly indicates that the impugned order is passed without proper application of mind. The Ld. Commissioner does not even whisper about the evidence in his findings. On this ground itself the said demand of Tax is liable to be set aside. 7.1 Further the impugned order also denied the benefit of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, and demand was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation proceedings. 8. Without prejudice to the above submissions on merits, the Appellant submits that the impugned orders, in Appeal Nos. ST/20487/2012 and ST/30015/2016 could not have invoked extended period of limitation, when the department is in complete knowledge of the construction services provided to CWG/various State Bus Terminals/APMC Yard, etc. at the time of issue of show cause notice vide O.R. No. 120/2011-Adjn dated 22.10.2011 on the same set of facts and allegations, and the proceedings in the above said appeals being periodical. In other words, the first show-cause notice itself was issued based on certain relevant facts and when there was no change of facts for the subsequent period, the allegation of suppression of facts raised in the subsequent periodical notices was untenable, in terms of the following decisions: Nizam Sugar Factory Vs.CCE -2006 (197) ELT 465 (SC) Hyderabad Polymers (P) Ltd.Vs. CCE -2004 (166)ELT151 (SC) P B Pharmaceuticals (P) Ltd.Vs. CCE - 2003 (153) ELT 14(SC) Geo Tech Foundation Constr. Vs. CCE -2008 (224) ELT 177(SC) ECE Industries Ltd Vs. CCE - 2004 (164) ELT 236(SC) Demand for short payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant have not filed any supporting documents about the value of the materials consumed in execution of the works contract. Appellant also did not produce any evidence in support of payment of VAT/Sales Tax for consideration of abatement as regards the material component. 13.1 As regards availment of composition scheme assessee is require to opt for the scheme under Rule 3(3) of Works Contract Composition Rules, 2007. However, Rule 2A of Service tax (Determination of Value) Rules, 2006 provides that value of taxable service will be gross amount charged for works contract, less the value of transfer of property in goods, in execution of the work. 13.2 Appellant have also raised the plea that 2 projects NTPC and NTPC Noida have been sub-contracted on back to back basis, and tax liability on these works can be fastened only on the sub-contractor. 14. Adjudicating Authority held that in respect of services rendered to NGHC Ranchi, the service tax payable at the rate of 12.36% on 40% of the total value of contract, works out to 4.94%, whereas appellant have paid service tax at 4.12% only during the period July 2012 to September 2014. The short paid service tax amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nantly for used other than for commerce nature or any other business or profession. 18. So far the construction done for Common Wealth Games 2010 is concerned, we hold that the same was an International Sporting Event and not a commercial activity. Accordingly, we hold that the same was exempt and not taxable. 19. So far construction done for Delhi University, wherein the work was awarded through Engineers India Ltd., (consultant management) admittedly, we find Delhi University is an academic institution, and construction provided to it are held to be not commercial in nature, and accordingly, we hold the same are exempted. In the facts and circumstances, we find that the Learned Commissioner have erred in observing that the appellant could not prove that services for these purposes are non-commercial in nature. We also hold that inclusion of the clause in the agreement that service tax if any has to be borne by the contractor/ service provider, does not alter in any way the provisions of service tax with respect to the tax liability. We also find that the works of construction of transport terminal is also exempt from service tax under clause 12(a) of Notification No. 25/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the composite scheme was provided. The benefit of the scheme to the appellant was denied as it could not opt for composition scheme in due time. Thus, we hold that benefit of composition scheme is available to the assessee, and accordingly the denial of benefit of composition scheme is set aside. 20. So far the issue of benefit of abatement (for material) under the Notification No. 1/2006-ST is concerned, the appellant had initially taken the Cenvat Credit which they had reversed under intimation to Revenue. Such claim have not been found to be wrong. Hon ble Supreme Court have held in the case of Chandrapur Magnet Wires that where the Cenvat Credit taken is reversed, it amounts to Cenvat Credit have never been taken. Accordingly, we hold that the denial of benefit of abatement under Notification No. 1/2006-ST is bad and is set aside. Subsequent to the ruling of Larson Toubro (SC), Tribunal and the High Courts in several matters have held that the assessee are entitled to composition scheme, particularly in the case of Mehta Corporation Vs CCE, Jaipur (supra). 21. So far the demand of tax with respect to the work executed for NG, Ranchi Rs. 7,04,639/- and Rs. 7,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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