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TMI Blog2024 (12) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... been awarded the work for construction of dam, therefore, on this count also, they would be exempted from payment of Service Tax. They have relied on various case laws in support of these two main lines of argument. 3. The issue, in brief, is that the appellants entered into an agreement with M/s Transstroy (India) Ltd (hereinafter referred to as the Contractor), on 16.03.2016 to undertake "earthwork leveling works involving drilling, blasting, excavation and leveling of Hard Rock and soils to required level and slope" at Polavaram. The contractor had been awarded the work of constructing part of dam from M/s Transstroy - JSC EC UES JV (hereinafter referred to as the Principal Contractor), who, in turn, was awarded the work by the Government of Andhra Pradesh for construction of dam. The Department's view was that as the sub-contractor was not providing any direct service to the Government, therefore, they would not be entitled for exemption under S.No.12(d) of Notification 25/2012. The Department was also of the view that, in view of the admitted position by the appellants, the nature of work performed by them was not in the nature of 'Works Contract' and therefore, they would a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Infra & Geo Structures Vs Prl CCT, Visakhapatnam-GST [2019 (5) TMI 75 - CESTAT Hyderabad] d) M/s Keen & Core Developers Vs CCGST, Greater Noida [2024 (3) TMI 758 - CESTAT Allahabad] 6. By way of an alternative argument, he submits that their work is in the nature of WCS and it is therefore, covered under S.No.29(h) of Notification 25/2012, therefore, on this count also, they will not be liable to Service Tax. He has argued that they have been using lubricants, spare parts, in connection with heavy machineries deployed for the activities undertaken by them on which VAT has been paid. They have also been using explosives for blasting. Therefore, in terms of definition of WCS, they are entitled for exemption under S.No.29(h) of Notification also. 7. On the other hand, learned AR for Revenue has mainly contested that the nature of activities, as reflected from the agreement, indicates that they are more in the nature of site formation, blasting, excavation, etc., which cannot, by any stretch of imagination, be considered as services towards construction of dam. Moreover, the sub-contractor has not provided any service directly to the Government and it is an admitted position that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vel and profile, cost of all materials, machinery, labour, placing the excavated soft rock at designated dump yards and leveling the dumped rock to the required level and slope with a lead of 2 Km including all lifts. Cum 13,00,000 Rs.115.50/- (Rupees One Hundred Fifteen and paise fifty only) Rs.15,01,50,000 3. Excavation in hard rock requiring blasting including dressing of bed and sides to required level and profile, cost of all materials, machinery, labour, placing the excavated rock at designated dump yards and leveling the dumped rock to the required level and slope with a lead of 2 Km including all lifts. Cum 12,00,000 Rs.178.79/- (Rupees One Hundred Seventy Eight and paise seventy nine only) Rs.21,45,48,000 Total Amount Rs.36,58,69,800 10. On completion of the work, the sub-contractor raised invoices on the contractor for the work done in terms of the said agreement, as also on account of certain related issued like VAT reimbursement, cess reimbursement, price differences, etc. However, admittedly, no VAT has been paid on such invoices, even though the learned Advocate has shown an extract of the ledger showing deduction of VAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in hard rock, to the appellant and therefore, the activities performed by them would be in relation to the construction of dam only. On the other hand, the department is of the view that the appellants are providing certain services viz., Site Formation and Excavation, etc., to the Contractor, who was awarded the contract for construction of part of the dam by the Principal Contractor, who was awarded the contract for construction of dam by the Government of Andhra Pradesh. Therefore, there is no direct relation to the activities performed by the appellant towards construction of dam. Per contract, the argument by the appellant is that it is a settled law that even when the services are not provided directly by the sub-contractor and are provided only through contractor then also, as long as it is intended for final project, which is otherwise for the Government, they will be eligible for exemption. 13. The first issue is to understand as to what the actual work is that is allotted to the appellant by the Contractor, who was awarded construction of part of dam by the Principal Contractor. From the perusal of the agreement, it appears that it is in the nature of Earth Leveling wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list based Service Tax in 2012. There was also an exemption available to such site formation services (vide Notification 17/2005-ST dt.07.06.2005) when provided in relation to, inter alia, construction of dam. However, after the introduction of Negative List, no such exemption is available for any site formation activities or services provided, which may be in relation to construction of dam. Therefore, going by the strict interpretation of notification, the activities of site formation, excavation, removal of soil boulders, etc., for dam spillway intake structure, etc., would not strictly be covered within the ambit of the expression "by way of construction" of dam. It is also a settled legal position in view of the judgment of Hon'ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar and Co & Ors [2018 (7) TMI 1826 (SC)] that an exemption notification claimed must be strictly interpreted by way of plain reading of the expression and only when there is any ambiguity or possibility of two different interpretations, the benefit should go to the Revenue. In this case, in view of the fact that the site formation services were separately classifiable service prior to 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, in this case, it cannot be held that the appellants have provided service by way of construction of dam. 17. As discussed in the foregoing paras, as the activities undertaken by the appellant are not covered within the expression in Notification 25/2012 then whether they have been provided directly or indirectly would not have any significance. Secondly, when the Government intended to provide exemption to site formation and clearance, excavation, earth moving and demolition, which exactly are the kind of activities assigned to the appellant, when provided to any person by any other person in the course of construction of roads, dams, etc., there was a specific exemption available for the activities. Therefore, in the absence of any specific exemption available for the activities being performed by the appellant in the post Negative List regime, their activities cannot be considered for coverage under S.No.12(d) of Exemption Notification 25/2012. As far as the issue of contractor and sub-contractor is concerned, this Bench, in the case of Akash Engineering Services Vs CCT, Visakhapatnam-I [Interim Order No.26/2023 dt.15.12.2023] has dealt with the liability to pay Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding engineering, procurement and construction or commissioning (EPC) projects." 19. From the agreement itself it is obvious that this is not in the nature of Works Contract. Admittedly, the appellants have only used lubricants, consumables, spares in relation to heavy machineries and explosives for blasting, which were used for carrying out their activities of site preparation, drilling, blasting, etc. Therefore, mere use of lubricants, consumables and explosives, etc., in relation to their work cannot be considered as invoving transfer of property in goods involved in execution of such contract, which is leviable to tax as sale of goods, to fall within the category of WCS. Thus, in the facts of the case, the activities being performed by the appellant cannot be considered as WCS. Moreover, there is no evidence to suggest that appellants were discharging VAT on this contract by treating it as deemed sales. Thus, even their alternative claim for exemption under S.No.29(h) of the Notification 25/2012 would also not be admissible because the nature of the work itself being provided by them to their Contractor is not in the nature of WCS and therefore, it would not be covered within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on lubricants, spares, explosives, etc., from the Contractor. However, even if the appellants are claiming that VAT has been paid on lubricants, spares, etc., the definition of WCS would entail that they were otherwise required to transfer the property in goods to the Contractor or recipient for it to be covered within the definition of WCS. Under the VAT laws, when there is a deemed sale, the VAT is leviable unless otherwise exempted. In this case, there is no evidence adduced by the appellant that they had discharged any VAT on the services/activities performed by them to their Contractor or it was otherwise exempted. Therefore, the activities are more in the nature of service of site formation, etc., as held by the department. Therefore, on this count also, they would not be eligible for exemption under S.No.29(h) of the Notification 25/2012. 22. In view of the discussions in the foregoing paras, we hold that appellants are neither eligible for exemption under S.No.12(d) nor under S.No.29(h) of the Notification 25/2012-ST dt.20.06.2012. 23. In so far as the issue relating to limitation is concerned, we find that the Adjudicating Authority has sustained invocation of exten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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