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Custom, Excise & Service Tax Tribunal

Mahisagar Welding Works vs Ahmedabad-Iii on 26 September, 2024

    CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
             WEST ZONAL BENCH : AHMEDABAD
                        REGIONAL BENCH - COURT NO. 3

                SERVICE TAX Appeal No. 10331 of 2018-DB

[Arising out of Order-in-Original/Appeal No AHM-EXCUS-003-APP-0129-17-18 dated
25.09.2017 passed by Commissioner (Appeals) Commissioner of Central Excise, Customs
and Service Tax-AHMEDABAD-III]


Mahisagar Welding Works                                        .... Appellant
22 Krishna Complex, Opp. Gayatri Temple,
Kalol, GANDHINAGAR, GUJARAT

                                       VERSUS

Commissioner, CGST & Central Excise, Ahmedabad-iii .... Respondent

Custom House, 2nd Floor, Opp. Old Gujarat High Court, Navrangpura, Ahmedabad, Gujarat -380009 APPEARANCE :

Shri Vipul Khandar, Chartered Accountant, for the Applicant Shri Himanshu P Shrimali, Superintendent (AR) for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) DATE OF HEARING : 19.09.2024 DATE OF DECISION: 26.09.2024 FINAL ORDER NO. 12192/2024 RAMESH NAIR :
In this appeal the appellant have raised the following issues:-
(a) Whether appellant's service can be classifiable under Commercial & Industrial Construction service or WCT service.
(b) Notwithstanding, appellant has been engaged in business of laying of pipelines to their various clients, in which appellant carried out construction work with material & discharge service tax without inclusion of free supply material value, whether appellant was eligible for the benefit of notification of 1/2006-ST of abatement or not.
(c) Whether demand for extended period u/s. 73(1)(a) invoked or not.
2

Appeal No. ST/10331/2018-DB

(d) Whether penalty u/s 76 & 77 of Finance Act, 1994 can be imposable, when matter involves issue relating to the interpretation & factual finding or not.

2. Shri Vipul Khandar, learned Chartered Accountant appearing on behalf of the appellant at the outset submits that abatement under Notification No. 1/2006-ST was denied and consequential demand was raised only on the ground that the material i.e. the value of pipes supplied by ONGC was not included in the gross value of the construction service. He submits that this issue has been settled by the Hon'ble Supreme Court in the case of Commissioner of Service Tax vs. Bhayana Builders (P) Limited - 2018 (10) GSTL 118 (SC). He further submits that since the service of the construction was provided along with material, the service is correctly classifiable under Works Contract service and for this reason also the demand will not sustain. He submits that the demand for extended period is not sustainable as there is no suppression of facts. In support of his submission, he placed reliance on the following judgments:-

(a) Daelim Industrial Company vs. CCE 2003 (155) ELT 457 (Tri.-

Del.)

(b) Fire Pro Systems Pvt. Limited vs. Commissioner of Service Tax - 2008 (10) STR36 (Tri. Bang.)

(c) Commissioner of Central Excise vs. Indian Oil Tanking Limited - 2008 (10) STR 11 (Tri.-LB.)

(d) S.P. Sharma vs. Commissioner of Central Excise - 2008 (9) STR 572 (Tri. Del)

(e) Emerson Process Management Power & Water Solution Inc. vs. Commissioner of Central Excise - 2006 (3) STR 508 (Tri. Del.)

(f) Commissioner of Central Excise vs. Flex Engineering Limited - 2006 (1) STR 208 (Tri. Del).

(g) Commissioner of Central Excise vs. Shapporji Pallonji & Co. Limited

- 2006 (1) 164 (Tri. Del).

3. Shri Himanshu P Shrimali, learned Superintendent (AR) appearing for the Revenue reiterates the findings of the impugned order.

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Appeal No. ST/10331/2018-DB

4. We have carefully considered the submissions made by both the sides and perused the record. We find that the sole reason for denying the benefit of Notification No. 1/2006-ST is on the basis that appellant have not included the cost of material i.e. pipes supplied by ONGC in the gross value therefore, as per the department there is violation of condition of notification hence the demand was confirmed. This issue is no longer res-integra as in the case of Bhayana Builders (P) Limited (supra) it was held that the cost of material supplied free of cost by the service recipient need not be included in the gross value of construction service. Therefore, for this reason, the demand is not sustainable. Since the entire issue is decided on this basis, we are not addressing other issues raised by the appellant. Accordingly, the impugned order is set-aside and appeal is allowed.

(Pronounced in the open court on 26.09.2024) (Ramesh Nair) Member (Judicial) (C L Mahar) Member (Technical) KL