Custom, Excise & Service Tax Tribunal
Raipur vs National Project Construction ... on 7 February, 2020
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. II
Service Tax Misc. Application No. 50874 of 2019 with
(on behalf of the appellant)
Service Tax Cross No. 50807 of 2017 in
Service Tax Appeal No. 50763 of 2017
(Arising out of Order-in-Appeal No. BHO-EXCUS-002-APP-283-16-17 dated
15.12.2016 passed by the Commissioner (Appeals), Central Excise and Customs,
Raipur)
Commissioner, Customs & Central Excise, Raipur Appellant
New Central Excise Building,
Dhamtari Road, Tikrapara,
Raipur (C.G).
Versus
M/s National Project Construction Corporation Ltd. Respondent
CWC, Works, Bilaspur, H/o of Sanjay Sahu, Opp. Santoshi Maa Temple, Chantidih, Bilaspur (C.G.) Appearance Shri A. Thaplial, DR - for the appellant Shri J.K. Mittal, Advocate - for the respondent CORAM:HON‟BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON‟BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) Date of Hearing: 23.01.2020 Date of Decision: 07/02/2020 Final Order No. 50170/2020 Anil Choudhary:
The issue in this appeal is whether under the admitted facts that the appellant has rendered construction service along with materials (composite contract), whether the service is classifiable under „works contract service‟ or „commercial or industrial construction service‟. The second issue is whether the extended period of limitation is rightly invoked.2
2. The brief facts are that the respondent is a Public Sector Undertaking having one of their office at Chantidih, Bilaspur, Chhattisgarh and are engaged in providing construction services to National Thermal Power Corporation Limited ("NTPC" for short), at Sipat, Bilaspur. The respondent assessee obtained registration on 10 April, 2012. It appeared to Revenue that the respondent assessee failed to furnish the ST-3 returns and avoided payment of service tax. In compliance to queries by the Range Supdt., the appellant furnished details of site wise statement of payment receipt from NTPC, Sipat for the period November, 2011 to October, 2012, against the construction of offsite works and balance road work. They also furnished copy of contract, copy of purchase order between NTPC and the respondent for balance road work package, copy of TDS certificate for the period April, 2011 to December, 2012. Accordingly, show cause notice was issued invoking the extended period of limitation calculating the tax liability under Section 72 (best judgement assessment) for an amount of Rs. 28,66,619/- including cess. Further, penalty was also proposed.
3. The show cause notice was adjudicated on contest vide order-in-original dated 28 May, 2015 determining that service tax is payable under the category of „commercial and industrial construction service‟ and, accordingly, appellant is not entitled to pay service tax under the „composition scheme‟ as claimed by them (applicable in the case of works contract service) confirming the reduced amount of Rs. 21,33,559/- and dropping the amount of Rs. 7,33,060/-, along with interest and equal amount of penalty under 3 Section 78. Further, penalty of Rs. 5000/- was imposed under Section 77 of the Finance Act.
4. Being aggrieved, the respondent - assessee preferred appeal before the Commissioner (Appeals) on the ground that the construction of road work is not a taxable service under Finance Act, 1994. Further, „works contract service‟ is the applicable head of taxation as the appellant have admittedly undertaken composite service including supply of materials. The learned Commissioner (Appeals) took notice of the ruling of Hon‟ble Supreme Court with respect to composite contracts in the case of Commissioner of Central Excise and Customs Vs. Larsen & Toubro Ltd. and Others - 2015 (8) TMI 749 being judgement dated 20 August, 2015 and also took notice of the two earlier show cause notices issued on the respondent - assessee which were subject matter of appeal before this Tribunal and vide Final Order No. ST/A/53646- 53647/2016-CU(DB) dated 19 September, 2016, it was held that - the demand in respect of earlier show cause notice dated 26 May, 2009 and 19 April, 2012, up to the period 31 May, 2007 is unsustainable and the demand after 1st June 2007 (when works contract classification was introduced) has to be charged under the category of „works contract service‟. It was also held by the Tribunal that the subsequent show cause notice dated 19 April, 2012 covering the period April, 2008 to November, 2011, the extended period of limitation is not applicable. This Tribunal also held that in view of the first show cause notice dated 26 May, 2009 invoking extended period of limitation, the subsequent show cause notice dated 19 April 2012 cannot be again issued invoking the 4 extended period of limitation, in view of law laid down by the Apex Court in Nizam Sugar case.
5. The Revenue preferred appeal against the order of the Tribunal before Hon‟ble Chhattisgarh High Court. The Hon‟ble High Court did not interfere with the findings of this Tribunal as regards classification of service and remanded the matter to the adjudicating authority to decide the issue of extended period applicability considering the facts of the assessee‟s case with respect to the facts in the ruling of Nizam Sugar.
6. Being aggrieved with the order of the Commissioner (Appeals) holding that the issue before him is covered by the earlier final order of this Tribunal dated 19 September, 2016, on merits, remanding the matter to the lower authority to re-examine the issue by going through the relevant contract and other documents in the light of the ruling of Apex Court in Larsen & Toubro and to pass a fresh order. Revenue preferred the present appeal as regards the issue of limitation and also on the ground that they have filed appeal before the earlier order of this Tribunal dated 19 September, 2016 before Hon‟ble High Court of Chhattisgarh. The respondent assessee have filed cross objections:- The adjudicating authority have given its finding in the order-in-original dated 28 May, 2015, which are not disputed by Revenue, as follows:
(a) In para 8.4 of order-in-original - NTPC have awarded composite contract for construction of offsite Area; 5
(b) In para 8.11 of order-in-original - I find that both contracts are composite contracts;
(c) In para 8.7 of order-in-original - Thus, I find, the services rendered by the noticee to NTPC appropriately fall under sub-clause (zzq) of clause (105) of the Finance Act, 1944 as CICS and are taxable under Section 66;
(d) In para 8.11 of order-in-original - I find that both the contracts are composite contracts. They cannot be vivisected individually into different individual services.
Accordingly, services rendered by noticee to NTPC appropriately fall under the taxable category of CICS.
(e) In para 8.12.2 of order-in-original - Construction of civil work of stage-II of the said projects is classifiable under the head CICS;
(f) In para 8.12.4 of order-in-original - The road which is constructed within factory or any private premises is liable for service tax;
(g) In para 10.6.3 of the order-in-original - Without prejudice to the above finding that the impugned service is classifiable under CICS, even if the impugned service is classifiable under works contract service, still the noticee are not entitled to make payment of service tax under the works contract service (Composition Scheme for Payment of Service Tax) Rules, 2007;
(h) In para 10.6.4 - when the dispute of classification has been decided in adjudication proceedings for the earlier 6 period, it is impermissible to allow the manner of assessment to shift from CICS to WCS;
(i) In para 13.4 of order-in-original - I observe that in the said decision of M/s Bhayana Builders Pvt. Ltd., Delhi High Court, the legal provisions which were invoked were significantly different
(j) In para 13.8 of order-in-original - As the noticee have not included the „cost of free supplied materials‟ in the cost/value of service, therefore, the claim of noticee that they may be granted abatement under Notification No. 1/2006-ST is not acceptable and accordingly, their request is disallowed;
(k) In para 15.4 of order-in-original - Hence the extended period of limitation as provided under proviso to Section 73(1) of the Finance Act, 1994 is rightly and legally invocable in the instant case.
7. The learned Counsel for the respondent assessee urges that the order of remand by the learned Commissioner (Appeals) is bad as firstly the issue of classification is no longer res integra and under the admitted fact that the appellant have rendered composite service, including the value of materials, their service has to be classified only under the head works contract service, as held by the Hon‟ble Supreme Court in Larsen & Toubro (supra). Thus, the demand of service tax under CICS is bad and fit to be set aside. As regards limitation, it is admitted fact that for the same two contracts of service including supply of material being executed by the respondent assessee for NTPC this is 3rd successive notice on 7 the same facts and circumstances. Thus, in view of law laid down by Hon‟ble Supreme Court in the case of Nizam Sugar (supra), the extended period of limitation is not available to Revenue.
8. Learned Authorised Representative for Revenue states that they have filed Misc. Application for withdrawal of their appeal under the litigation policy and as such their appeal may be disposed of accordingly, and the cross objections of the assessee have also to be disposed of consequently without adjudication. In response the Counsel for the respondent assessee have relied on ruling of Hon‟ble Kerala High Court, in City Centre and Developers & Others Vs. Income Tax Appellate Tribunal & Others, wherein the Hon‟ble High Court allowing the writ petition held "that the cross objection filed in an appeal has to be treated as an independent appeal and has to be decided irrespective of the fact as to whether the appeal filed by the department has been dismissed on whatever grounds. There is no doubt about the above proposition. The appellate authority was, therefore, not justified in rejecting the cross objection as infructuous" .
9. Having considered the rival contentions, we hold that under the admitted facts and circumstances in this appeal, the service rendered by the appellant is taxable only and the category of works contract service in view of the law laid down by Hon‟ble Supreme Court in Larsen & Toubro (supra). Secondly, we hold that the work relating to road construction, even in the premises of NTPC, which may be termed as private road is exempt service as per the definition of works contract service which specifically exempts „road service‟. There is no distinction made out by the legislature with 8 respect to public road and private road. We further find that admittedly, the appellant have paid the service tax under the works contract composition scheme along with the interest. We hold that the appellant is entitled to pay tax under the „works contract composition scheme‟ and once they have discharged the tax liability there is no further liability on them. Accordingly, this appeal filed by Revenue is dismissed and the cross objection filed by the respondent assessee are allowed. Misc. Application by Revenue stands disposed of. The respondent assessee is entitled to consequential benefits in accordance with law. The respondent assessee is directed to submit a calculation of the discharge of the tax liability under the works contract composition scheme before the adjudicating authority. If in case any discrepancy is found, the same shall be pointed out to the assessee and assessee shall deposit any tax which is found to be short paid, on verification of the calculation.
10. Thus, the appeal of Revenue is dismissed, and cross objection of assessee is allowed. Misc. application filed by Revenue also stands disposed of as infructuous.
(Pronounced in Court on. 07.02.2020) (Anil Choudhary) Member (Judicial) ` (C.L. Mahar) Member (Technical) RM