TMI Blog2024 (4) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... al construction service - HELD THAT:- During this period, the appellant was not registered with the service tax. From 1.6.2007, the appellant is registered under the head Works Contract Service and paid service tax on the service. There is no dispute that the nature of the service was the same both before and after 01.06.2007 - Works Contract Service is a contract which involves rendering of service along with transfer or deemed transfer of property in goods. For instance, if a builder constructs a building under a contract including the cost of materials, not only does he render the service but he also transfers the property in the material used such as bricks, steel, cement, etc. while rendering the service. Such services are distinct from contracts for sale of goods or contracts for rendering services and are known to commerce as a separate species of contracts. Such contracts became chargeable to service tax as works contracts service w.e.f 1.6.2007 and there was no charge of service tax on such services prior to 01.06.2007 as held by the Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] - the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case is that the impugned order confirmed demands on the value of the free materials supplied by the clients of the appellant - HELD THAT:- It is found from the SCN that demands have been made on this account. It has been decided by the larger bench of this Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS [ 2013 (9) TMI 294 - CESTAT NEW DELHI-LB ] that the value of supplies made free of cost by the service recipient cannot be included in the taxable value for calculating service tax. This decision was upheld by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT ]. Therefore, the demand on this account needs to be set aside. Appeal allowed in part. - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT And HON BLE MR. P. V. SUBBA RAO , MEMBER ( TECHNICAL ) Shri Alok Kumar Kothari , Advocate for the Appellant Shri Manoj Kumar , Authorized Representative for the Department ORDER P. V. SUBBA RAO M/s. Shrey Associates the appellant , filed this appeal to assail the order in original the impugned orders dated 28.2.2017 passed by the Commissioner Alwar whereby he confirmed a demand of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free supplies need not be included in the taxable value for determining the service tax. The demand is time barred and service tax was not paid as there was a lot of confusion and the appellant was under the bonafide belief that no service tax was payable. b) For the period 1.6.2007 to 30.6.2010, since the service was classified as Works Contract service, the benefit of Works Contract (Composition scheme for payment of service tax) Rules, 2007 should have been given but it was denied on the ground that the appellant had not exercised its option as per the scheme. The benefit of composition is available even if no letter was filed exercising this option. Reliance is placed on: i) ABL Infrastructure Pvt. Ltd. vs Commissioner 2015 (38) STR 1185 (Tri-Mumbai) ii) Bridge and Roof Co. (India) Ltd. vs Commissioner of Central Excise, Jaipur 2012(27) STR 406 (Tri-Del.) c) The demand in respect of the work done for (i) Mahatma Gandhi Hospital; (ii) Acharya Tulsi Shanti Pratisthan; and (iii) Shri Amar Jain Medical Relief Society were not chargeable to service tax because these organisations were exempted under section 12AA of the income tax Act, 1961. d) Service tax is not leviable on construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned 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) 20. We also find that the assessees argument that there is no charge to tax of works contracts in the Finance Act, 1994 is correct in view of what has been stated above. .. 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines taxable service as any service provided . All t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, 1994. For example, a works contract involving the construction of a bridge or dam or tunnel would presumably fall within Section 65(105)(zzd) as a contract which relates to erection, commissioning or installation. It is clear that such contracts were never intended to be the subject matter of service tax. Yet, if learned counsel for the revenue is right, such contracts, not being exempt under the Finance Act, 1994, would fall within its tentacles, which was never the intention of Parliament. 9. Therefore, the demand of service tax on works contracts executed prior to 1.6.2007 under the head commercial or industrial construction service cannot be sustained. 10. As far as the demand for the period after 1.6.2007 is concerned, the appellant contested it both on limitation and on merits. On limitation, it is the case of the appellant that none of the elements necessary to invoke extended period of limitation viz., fraud or collusion or wilful mis-statement or suppression of facts or violation of the Act or Rules with an intent to evade payment of duty were present. The reasons for invoking extended period of limitation given in the SCN are as follows: 12. Whereas it appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 1.6.2007. Therefore, the appellant was correct in not taking registration and not paying service tax on such contracts. The second ground is that even after registering, the appellant had not disclosed truthfully, the gross amounts which it had collected for the services. This is quite understandable because if according to the understanding of the appellant, it was not liable to pay service tax on certain services and according to the Revenue, it was liable to pay service tax on such services, the gross value of services differs in the two calculations. If in the opinion of the officer, the assessee had not assessed the duty correctly, or if the assessee had not filed the return at all by due date, he had to resort to best judgment assessment under section 72. The remedy against wrong self-assessment by the assessee is the best judgment assessment by the officer whose job it is to scrutinise the returns and call for any records and accounts which he deems necessary and raise a demand within the normal period of limitation. If the officer fails to do so, it does not mean that the assessee has suppressed any facts and it only means that the officer did not discharge his du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and evidence of the value of the goods but the appellant had not done so. Therefore, the demand has been raised on the gross amounts received without any abatement towards the value of the goods. The reason for not allowing abatement as recorded in paragraphs 44 and 45 of the impugned order is that the appellant had not opted for payment of service tax under Works Contract Composition scheme. In this factual matrix, when it is undisputed that goods were used in execution of the contracts and the value of the goods is not available, it will not be open to the department to charge service tax on the entire gross amounts received including the value of the good transferred. Service tax cannot be charged on the value of the goods sold or otherwise transferred as a part of the contract. We find that even if the appellant had not opted for the composition scheme by submitting a letter in writing as required during the relevant period, if it is otherwise eligible for the benefit of the composition, it cannot be denied for the technical fault of not submitting a letter within time. Accordingly, the demand for the normal period of limitation under this head is confirmed allowing abatement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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