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TMI Blog2024 (11) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... f Value) Rules, 2006. Accordingly, service tax was demanded and confirmed 50% of 70% of the total amount charged instead of 50% of 40% as per the above Rules. With regard to clearances to units in SEZ in terms of Notification No. 12/2013-ST dated 01.07.2013, the Commissioner observed that the conditions of the said Notifications were not satisfied in as much as only the specified services duly authorised were eligible for the exemption. Accordingly, demands were confirmed denying the benefit of the above Notification. The impugned order also confirmed interest on both the above demands and also imposed penalty under Section 78 of the Finance Act, 1994 for suppression of facts and contravention of various provisions of the Act with intent to evade payment of service tax. Aggrieved by this order, the appellant is in appeal before us. 3. The learned Chartered Accountant submits that activities undertaken by the Appellant would not fall under the category of "other than original works" i.e., completion and finishing service. It is stated that the provisions of Rule 2A(ii)(B) of Service Tax (Determination of Value) Rules, 2006 would cover the following works in relation to immovable pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion', it is submitted that any change or modification to a base structure by carrying out works such as civil works, electrical works, sanitary fittings etc., will continue to fall with the purview of alteration and hence, form part of new constructions. It is further submitted that completion and finishing services are those activities which are primarily undertaken post completion of construction activity and since their activities are in relation to pre-construction activity or in the course of construction, they cannot fall under completion and finishing services. Reliance is placed on the decision of Supreme Court in the case of M/s. Kone Elevator India Pvt. Ltd. vs. State of Tamil Nadu and Others: 2014 (5) TMI 265 (SC) wherein it was held that agreement involving supply of both material and labour will qualify as "Works Contract" cannot be vivisected for activities performed thereunder. Also relied on the decision of the Tribunal in the case of Commissioner of Central Excise, Customs and Service Tax Cochin-CCE vs. M/a. Sherbrooke Aluminium Products: 2018 (8) TMI 1006 - CESTAT Bangalore and the decision in the case of M/s. Parul Associated Interiors Pvt Ltd. Versus Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-submission of prescribed forms or mention of different service in prescribed forms, wherein the services rendered are covered in the list of authorised services as listed in the Circular referred above. In this regard, reliance is placed on the following judgements to substantiate their claim that benefit of exemption otherwise available, cannot be denied merely on account of procedural lapses: * Government of Kerala Vs Mother Superior Adoration 2021 (3) TMI 93 - Supreme Court; * Union of India Versus. Suksha International & Nutan Gems & Anr. (Supreme Court) - 1989 (1) TMI 316 - Supreme Court; * Hemraj Gordhandas Versus. HH. Dave - 1964 (7) TMI 4 - Supreme Court; * Gujarat State Fertilizers Co. Versus Collector of Central Excise - 1997 (2) TMI 105 - Supreme Court; * Rama Spinners (P) Ltd. Versus. Commissioner of C. Ex., Hyderabad - 2007 (3) TMI 610 - CESTAT, Bangalore; 3.6 It is also submitted that even if exemption was denied and if service tax was payable for services provided by the appellant to SEZ unit, SEZ unit receiving such services would have been eligible for refund of service tax paid in full, when put to use for authorised operations, in other words, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, 1994, which is also not sustainable. At no point of time, the Appellant had suppressed any facts and all details were provided to the audit party during the course of audit and also, the fact that details covered in the impugned show-cause notice are based on the information made available in the form of Service Tax Returns, copy of signed financials and income tax returns provided by the appellant, hence, suppression cannot be alleged. Moreover, in the instant case, the issue pertains to interpretation of whether the services provided by the Appellant is 'Original Works' or 'Completion and finishing services' and not relating to willful mis-statement or any kind of suppression of facts, with an intent to evade any taxes and hence, the question of levying penalty under Section 78 of Finance Act, 1994 does not arise. In respect of services provided to SEZ unit, the issue relates to the services provided by the Appellant (Original Works) are different from services listed in authorization in Form A2 (Architect Service), which is clearly discussed above as to how they are eligible for the benefit, hence, penalty cannot be imposed. Reliance is placed on the following dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 577 (S.C.), wherein the Hon'ble Supreme Court observed that "In case of ambiguity in a charging provision, benefit must necessarily go in favour of assessee but the same is not true for an exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue". 5. Heard both sides and perused the records. The period of dispute is from October 2014 to June 2017. The issues to be decided are: a. Whether the services undertaken by the appellant fall within the definition of "Original Works" in terms of Rule 2A(ii)A or under "Completion and Finishing Services" in terms of Rule 2A (ii)(B)(ii) of the Service Tax (Determination of Value) Rules, 2006. b. Whether the appellant is eligible for the benefit of exemption Notification No. 12/2013-ST dated 01.07.2013 for the services rendered to the SEZ unit. 5.1 To examine the first issue, whether the works undertaken by the appellant are "original works" or "completion and finishing services", we need to look into the definition of these concepts as provided in the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) other similar expenses relatable to supply of labour and services; and (viii) profit earned by the service provider relatable to supply of labour and services; (c) Where value added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works contract under this clause. (ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely: - (A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract; (B) in case of works contract, not covered under sub-clause (A), including works contract entered into for, - (i) maintenance or repair or reconditioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts of the base structure made available, fixing of aluminium partitions, POP for walls, fixing tiles, fixing support for ceiling, laying of carpet etc.., 5 Data and Networking Laying of cable, installation of racks at server rooms, termination of cables at work stations (including testing and commissioning thereof) 6 Others It includes laying of conduit and cable, fixing of CCTV, laying of armoured cables, fixing of speakers and detectors (including testing and commissioning thereof) The definition of "original works" from the above Notification includes all new constructions; all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise. The services rendered by the appellant do not fall into the category of new constructions and therefore, the question of considering the above services as 'original works' cannot be acceded to. Hence, the impugned order to this extent is upheld. 5.3. The reliance placed by the appellant on the Supreme Court decision in the case of Kone Elevator (supra) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within thirty months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "thirty months", the words "five years" had been substituted. Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of thirty months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EZ unit "Cerner Healthcare Solutions Pvt. Ltd.", it is not in dispute that the 'works contract services' were rendered to the above SEZ unit based on the same A-1 Form based on which A-2 Form is issued. In this regard. it is submitted that the letter dated 02.01.2018 issued by the Department of Commerce (SEZ Section) reproduced below, which lists 66 services includes 'Architect Services' as well as 'Works Contract Services'. Therefore, even if it is considered to be 'works contract services', they are still eligible for the benefit of the said Notification. F. No. D. 12/19/2013-SEZ Government of India Ministry of Commerce & Industry Department of Commerce (SEZ Section) Udyog Bhawan New Delhi Dated the 02 January, 2018 To All Development Commissioners Special Economic Zone Subject: - Uniform list of services to be followed in SEZs - Reg. Sir/Madam I am directed to refer to this Ministry's letter No. D.12/25/2012-SEZ dated 16th September, 2013 and subsequent letters of even number dated 19th November, 2013, 19th June, 2014 and 9th July, 2014 vide which a list of 66 services which may be permitted by all Unit Approval Committees (UACs) as default au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2006", wherein the Central Government has prescribed the terms and conditions for grant of exemptions under Rule 22. Therefore, there is no question of comparing the terms and conditions prescribed in Rule 22 with the terms and conditions prescribed in the notifications issued under any one of five enactments listed in Section 26(1) to find out whether there was any inconsistency. 31. Support can be drawn for the above interpretation, from Section 50 of the SEZ Act, 2005 also. Section 50 of the SEZ Act, 2005 enables State Governments to enact laws for the grant of exemption from state taxes, levies and duties. Since a Central Law cannot provide for exemption from the levy of State taxes, Section 50 merely enables the State Governments to enact laws. 32. A combined reading of Sections 7, 26 and 50 of the SEZ Act, 2005, would show that SEZ Act, 2005 speaks of three different types of exemptions. They are, - (1) exemption from payment of taxes under the enactments specified in the First Schedule, in respect of goods and services exported out of, or imported into or procured from a DTA by a unit in a Special Economic Zone or a Developer under Section 7, (2) exemption from pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld by the Hon'ble Supreme Court in the case of Union of India Versus GMR Aerospace Engineering Ltd. in Special Leave Petition (Civil) Diary No. 22140 of 2019, decided on 26-7-2019 which reads as: "2. In the facts and circumstances of the present case, we see no reason to interfere with the impugned judgment and order of the High Court. 3. The Special Leave Petition is accordingly dismissed. 4. Pending applications, if any, are disposed of." 6.3 In the instant case, admittedly, the services were rendered to the SEZ unit by the appellant, the only objection raised was that the services rendered was 'Works Contract Services' while it is mentioned in the form as 'Architect services'. The fact that services were rendered to the SEZ unit is not disputed and both the services are eligible for the benefit of exemption as per the letter dated 02.01.2018 issued by the Department of Commerce (SEZ Section), therefore, we do not find any reason to deny the exemption. Hence, the impugned order to this extent is set aside. 7. In view of the above, the demand of Service Tax is confirmed for the normal period along with interest with regard to the 'works contract services' undertaken b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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