Custom, Excise & Service Tax Tribunal
T & T Projects Ltd vs Dibrugarh on 21 November, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 75126 of 2016
(Arising out of Order-in-Appeal No. 87/DIB/CE(A)/GHY/15 dated 08.10.2015 passed
by the Commissioner (Appeals), Customs, Central Excise & Service Tax (NER),
Custom House, Nilamoni Phukan Path, Christian Basti, Guwahati - 781 005)
M/s. T & T Projects Limited : Appellant
1st Floor, Khemka Building,
Dibrugarh - 786 001 (Assam)
VERSUS
Commissioner of Central Excise and Service Tax : Respondent
Dibrugarh, Milan Nagar Lane 'F', P.O.: C.R. Building,
Dibrugarh - 786 003
APPEARANCE:
Shri Devaraj Sahu, Advocate for the Appellant
Shri S.K. Dikshit, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 77622 / 2024
DATE OF HEARING: 13.11.2024
DATE OF DECISION: 21.11.2024
ORDER:[PER SHRI K. ANPAZHAKAN] The present appeal has been filed by M/s. T&T Projects Limited,Dibrugarh, Assam, (hereinafter referred to as "Appellant") against the Order-in- Appeal No. 87/DIB/CE(A)/GHY/15 dated 08.10.2015 wherein the Ld. Commissioner (Appeals) has upheld the demand of Rs.3,89,321/- and set aside the remaining demands confirmed in the Order-in-Original No.45/Addl.Commr/ADJ/BT/ST/COMMR/DIB/14-15 dated 23.03.2015.
Page 2 of 9Appeal No.: ST/75126/2016-DB
2. The facts of the case are that the Appellant is a Registered Contractor under PWD and undertaken Civil Construction Work under Dibrugarh Development Authority, a public Autonomous Body in Assam. The Appellant had undertaken construction of Commercial Complex at Dibrugarh, under 10% pool fund provided by the Ministry of Urban Development to the Govt. of India, out of the allocated budgetary support provided for North East region including Sikkim to be operational in the Ministry of Housing & Urban Poverty Alleviation from the financial year 2001-2002, Vider Order No. K-11019/19/2011-UPA, Govt. of India, Ministry of Housing & Urban Poverty Alleviation (UPA Division). The project is organized by the Govt. of Assam and the Govt. of Assam issued a Work Contract for construction of the Commercial Complex for the benefit of the poor and low- income group for providing support under the Central Pool. The Contract was allotted by the DDA under 10% pool fund for an amount of Rs. 3,98,29,677/- which includes supply of Materials, Technical Specifications, Drawings etc.
3. The appellant considered that the services rendered to the State Government are exempted from payment of service tax and accordingly not paid service tax for the construction service rendered. The department was of the view that the said activity is liable to service tax under the category of 'commercial or industrial construction service' on the ground that after construction, the complex is used for commercial or industrial purposes by the service recipients. Accordingly, notice was issued to the appellant demanding service tax on various activities where service tax was not paid by the appellant, including Page 3 of 9 Appeal No.: ST/75126/2016-DB the construction of commercial complex. After due process, the ld. adjudicating authority adjudicated the notice and confirmed the demand of service tax of Rs.3,89,321/- under the category of 'commercial or industrial construction service'. On appeal, the Ld. Commissioner (Appeals) passed the impugned order upholding the demand of service tax confirmed under the category of 'commercial or industrial construction service'.Aggrieved by the confirmation of the above demand, the Appellant has filed this appeal.
4. The Ld. Counsel appearing on behalf of the appellant referred the Board Circular No. 125/7/2010- S.T. dated 30.07.2010 in F.No. 354/35/2010-TRU and contended that the service rendered by the appellant to Central or State Government or their agencies, while implementing the centrally sponsored schemes (CSS) are not leviable to Service Tax. Since the commercial complexes was constructed under the 10% pool fund provided by the Ministry of Urban Development, Govt. of India and the project is meant for the benefit of the poor and low- income group for providing support under the Central Pool, the Appellant contends that the services rendered are exempted from the levy of Service Tax as clarified in the Circular referred supra. The construction of the complex is undertaken in public interest for the benefit of the poor people. Accordingly, he submitted that the demand of service tax confirmed under the category of 'commercial or industrial construction service' in the impugned order is not sustainable. He further submitted that they have undertaken the construction work along with supply of materials. Accordingly, as per the decision of the Hon'ble Apex Court in the case of Commissioner of Central Excise and Customs, Page 4 of 9 Appeal No.: ST/75126/2016-DB Kerala v. Larsen & Toubro Ltd.reported in 2015 (39) S.T.R. 913 (S.C.)., the service rendered is appropriately classifiable as 'Works Contract'. Since, there is no demand made in the notice under the category of 'Works Contract' service, the Appellant contends that the demand confirmed under the category of 'commercial or industrial construction service' is not sustainable.
5. In support of his contention, he cited the decision of this Tribunalin the case ofM/s.National Building Construction Corporation Ltd. v. Commissioner of Central Excise, Shillong [2022 (66) G.S.T.L. 476 (Tri. - Kolkata)] wherein it has been held that the construction work undertaken along with supply of materials is appropriately classifiable as 'works contract service'.
5.1. Accordingly, the Appellant prayed for setting aside the demand confirmed in the impugned order.
6. The Ld. Authorized Representative of the Revenue submits that as the appellant has rendered services for construction of commercial complexes which are meant for commercial use and hence the demand has been confirmedunder the category of 'commercial or industrial construction service' in the impugned order. Thus, he prayed for upholding the demand confirmed against the appellant.
7. Heard both sides and perused the appeal records.
8. We observe that the appellant has rendered the service of construction of a commercial complex at Dibrugarh, Assam under the 10% pool fund provided by the Ministry of Urban Development, Govt. of India, Page 5 of 9 Appeal No.: ST/75126/2016-DB out of the allocated budgetary support provided for North East region including Sikkim. According to the Appellant, the commercial complex was meant to be used for the benefit of the poor and low- income group for providing support under the Central Pool. The construction of the complex is undertaken in public interest for the benefit of the poor people. Accordingly, they claimed exemption from payment of service tax by referring Board Circular No. 125/7/2010-S.T. dated 30.07.2010 in F.No. 354/35/2010-TRU.However, in the impugned order, it has been held that the commercial complex is meant for commercial purposes and hence the appellant are liable for payment of Service Tax under the category of 'commercial or industrial construction service'. The appellant submitted that they have undertaken the construction work along with supply of materials. Accordingly, as per the decision of the Hon'ble Apex Courtin the case ofCommissioner of Central Excise and Customs, Kerala v. Larsen & Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)], the service rendered by them is appropriately classifiable as 'Works Contract'. Since, there is no demand made in the notice under the category of 'Works Contract', we find that the demand confirmed under the category of 'commercial or industrial construction service' is not sustainable.
9. We observe that it is a fact on record that the Appellant had rendered the said services along with materials. The service of construction of complex along with material is appropriately classifiable under the category of 'works contract service' as held by the Hon'ble Apex Court in the case ofCommissioner of Central Excise and Customs, Kerala v. Larsen & Toubro Ltd.reported in 2015 (39) S.T.R. 913 (S.C.).
Page 6 of 9Appeal No.: ST/75126/2016-DB The relevant portion of the said decision is reproduced below:
"17. We find that the assessees are correct in their submission that a works contract is a separate species of contract distinct from contracts for services simpliciter recognized by the world of commerce and law as such, and has to be taxed separately as such. In Gannon Dunkerley, 1959 SCR 379, this Court recognized works contracts as a separate species of contract as follows :-
"To avoid misconception, it must be stated that the above conclusion has reference to works contracts, which are entire and indivisible, as the contracts of the respondents have been held by the learned 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)
18. Similarly, in Kone Elevator India (P) Ltd. v. State of T.N. - (2014) 7 SCC 1 = 2014 (34) S.T.R. 641 (S.C.) = 2014 (304) E.L.T. 3 (S.C.), this Court held :-
"Coming to the stand and stance of the State of Haryana, as put forth by Mr. Mishra, the same suffers from two basic fallacies, first, the supply and installation of lift treating it as a contract for sale on the basis of the overwhelming component test, because there is a stipulation in the contract that the customer is obliged to undertake the work of civil construction and the bulk of the material used in construction belongs to the manufacturer, is not correct, as the subsequent discussion would show; and second, the Notification dated 17-5-2010 issued by the Government of Haryana, Excise and Taxation Department, whereby certain rules of the Haryana Value Added Tax Rules, 2003 have been amended and a table has been annexed providing for "Percentages for Works Contract and Job Works"
under the heading "Labour, service and other like charges as percentage of total value of the contract"
specifying 15% for fabrication and installation of elevators (lifts) and escalators, is self-contradictory, Page 7 of 9 Appeal No.: ST/75126/2016-DB for once it is treated as a composite contract invoking labour and service, as a natural corollary, it would be works contract and not a contract for sale. To elaborate, the submission that the element of labour and service can be deducted from the total contract value without treating the composite contract as a works contract is absolutely fallacious. In fact, it is an innovative subterfuge. We are inclined to think so as it would be frustrating the constitutional provision and, accordingly, we unhesitatingly repel the same." (at para 60)
19. In Larsen & Toubro Ltd. v. State of Karnataka, (2014) 1 SCC 708 = 2014 (34) S.T.R. 481 (S.C.) = 2014 (303) E.L.T. 3 (S.C.), this Court stated :-
"In our opinion, the term "works contract" in Article 366(29-A)(b) is amply wide and cannot be confined to a particular understanding of the term or to a particular form. The term encompasses a wide range and many varieties of contract. Parliament had such wide meaning of "works contract" in its view at the time of the Forty-sixth Amendment. The object of insertion of clause (29-A) in Article 366 was to enlarge the scope of the expression "tax on sale or purchase of goods" and overcome Gannon Dunkerley (1) [State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd., AIR 1958 SC 560 : 1959 SCR 379]. Seen thus, even if in a contract, besides the obligations of supply of goods and materials and performance of labour and services, some additional obligations are imposed, such contract does not cease to be works contract. The additional obligations in the contract would not alter the nature of contract so long as the contract provides for a contract for works and satisfies the primary description of works contract. Once the characteristics or elements of works contract are satisfied in a contract then irrespective of additional obligations, such contract would be covered by the term "works contract". Nothing in Article 366(29- A)(b) limits the term "works contract" to contract for labour and service only. The learned Advocate General for Maharashtra was right in his submission that the term "works contract" cannot be confined to a contract to provide labour and services but is a contract for undertaking or bringing into existence some "works". We are also in agreement with the submission of Mr. K.N. Bhat that the term "works contract" in Article 366(29-A)(b) takes within its fold all genre of works contract and is not restricted to one specie of contract to provide for labour and services alone. Parliament had all genre of works contract in view when clause (29-A) was inserted in Article 366." (at para 72) Page 8 of 9 Appeal No.: ST/75126/2016-DB
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 the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract."
9.1. We also observe that relying on the decision of the Hon'ble Apex Court in the case of L&T Ltd, this Tribunal in the case of M/s.National Building Construction Corporation Ltd. v. Commissioner of Central Excise, Shillong [2022 (66) G.S.T.L. 476 (Tri.
- Kolkata)], held thatthe construction of complex service rendered along with supply of materials is appropriately classifiable under the category of 'Works Contract Service' and not under the category of 'commercial or industrial construction service'.
9.2. Thus, by relying on the decision of the Hon'ble Apex court referred above, we hold that the services rendered by the Appellant in the instant case are Page 9 of 9 Appeal No.: ST/75126/2016-DB appropriately classifiable as 'works contract service'. However, we observe that there is no demand raised against the appellant in the notice under the category of 'works contract service' and therefore, we hold that the demand confirmed against the appellant under the category of 'commercial or industrial construction service' is not sustainable. Accordingly, we set aside the same. Since the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise.
10. In the result, we set aside the impugned order and allow the appeal filed by the appellant.
(Order pronounced in the open court on 21.11.2024) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd