Custom, Excise & Service Tax Tribunal
Pragati Concepts vs Commissioner Of Central Tax, Bangalore ... on 21 November, 2024
ST/20007/2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 20007 of 2022
(Arising out of Order-in-Original No. BLR-NORTH-COMM- 30/2021-22
dated 29.09.2021 passed by the Commissioner of Central Tax,
Bengaluru.)
Pragathi Concepts,
No. 108F -9, 6th Cross,
HGH Layout, Appellant(s)
New Airport Road,
Ganganagar,
Bengaluru - 560 032.
VERSUS
The Commissioner of Central
Tax,
Bengaluru North Commissionerate, Respondent(s)
HMT Bhavan, Ganga Nagar, Bengaluru - 560 032.
APPEARANCE:
Mr. Siddeshwar G. Yelamati, Chartered Accountant with Mr. Kushal Choudhary, Chartered Accountant (CA) for the Appellant Mr. Rajiv Kumar Agrawal, Commissioner (AR) for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 21157 / 2024 DATE OF HEARING: 22.07.2024 DATE OF DECISION: 21.11.2024 PER : R. BHAGYA DEVI The appellant M/s. Pragathi Concepts has filed this appeal against Order-in-Original No. 30/2021-2022 dated 29.09.2021 passed by the Principal Commissioner of Central Tax, North Commissionerate, Bengaluru.
2. The appellant is a partnership firm registered themselves under the category of "Architect Services" and provide 'Works Contract Services' to domestic commercial establishments and to Page 1 of 19 ST/20007/2022 Special Economic Zones (SEZ) units. The services undertaken by the appellant was considered to be falling under category of "Completion and Finishing Services" and not under the category of "Original Works" as defined under Rule 2A(ii)(B)(ii) of Service Tax (Determination of 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 property:
a. Maintenance of immovable property.
b. Repair of immovable property.
c. Completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property.
The appellant, in the instant case, undertakes activities in relation to new structure/building and it does not relate to maintenance of immovable property or repair of immovable property. With regard to completion and finishing services, it is submitted that this will apply only if the same is undertaken under a separate contract to provide merely completion and finishing services, but the services provided by the Appellant are bundled with other services and provided under a single/ Page 2 of 19 ST/20007/2022 indivisible contract and hence, cannot be said to be completion and finishing services and provisions applicable thereto, would not be applicable to the activities undertaken by the Appellant. The activities undertaken by them are civil work, electrical works, HVAC works, data and networking works followed by interior works are undertaken under a single indivisible contract.
3.1 It is further stated that the activities undertaken by the Appellant would fall under the purview of "Original works". The Explanation to Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Original work means (i) all new constructions (ii)...
(iii)... and there is no definition for the term "all new constructions" and hence, meaning thereto shall be derived from the meaning assigned to it in the Explanation to Section 66E of Finance Act, 1994, where term "construction" includes additions, alterations, replacements, remodelling of any existing civil structure. The term "original works" even includes additions and alterations to abandoned or damaged structure, which would also mean alterations to new buildings cannot be kept outside the ambit of Original Works and hence, would get covered under definition of "construction" as given in Explanation to Section 66E of the Finance Act, 1994. Further, definition of "original works" as per CPWD manual includes additions and alterations of any new structures, which is the case with works done by Appellant. Considering the above, works done by Appellant, it will fall within the meaning of "Original Works" and hence, liable to service tax at 40% of the total amount charged.
3.2 Referring to the definition of 'Alteration', 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 Page 3 of 19 ST/20007/2022 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 Commissioner of Service Tax, Bangalore: 2014 (1) TMI 669 - CESTAT Bangalore.
3.3 The learned Chartered Accountant with regard to SEZ clearances submitted that Notification No.12/2013-ST dated 01.07.2013 provides for exemption from payment of whole service tax when such services are used for authorised operations within the SEZ unit. The exemption has been denied stating that the services provided by the Appellant is 'Works Contract Service' whereas Form A2 mentions 'Architect Service'. Referring to the Circular issued by Government of India, Ministry of Commerce, SEZ Division (New Delhi), Circular No D.12/19/2013-SEZ dated 19.11.2013 wherein it is stated that services in the nature of "Architect services" (at Sl.No.2) and "Works Contract Services" (at Sl.No.55) of the Annexure where both qualifies and are permitted by all Unit Approval Committees as default authorised services. Hence, both the services qualify as authorised services for SEZ operations and will be eligible for exemption. Further, it is submitted that the impugned order does not dispute the fact that the appellant had provided the works contract service to the SEZ unit and hence, in terms of Notification No.12/2013-ST dated 01.07.2013, the appellant is eligible for the exemption meant for the authorised operations.
3.4 Referring to the various provisions of the SEZ Act, 2005, the learned Chartered Accountant further submitted that the SEZ Page 4 of 19 ST/20007/2022 Act has overriding effect over service tax laws which provides for upfront exemption from payment of service tax on services procured and used for the authorised operations within the SEZ units. Relies on the decision in the following cases:
• GMR Aerospace Engineering Limited and another v. Union of India and Others 2019 (31) G.S.T.R. 596 (A.P.)]; • M/s DLF Assets Pvt Ltd. versus the commissioner, Service Tax, Delhi - I 2020 (11) TMI 35 - CESTAT Delhi;
• M/s Divi's Laboratories Ltd. Vs Commissioner of Central tax, Visakhapatnam 2021 (9) TMI 358- CESTAT Hyderabad;
• Mast Global Business Services India Pvt. Ltd. v. Commissioner of Central Tax [2018- TIOL-3115-CESTAT- BANG];
• M/s. ONGC Mangalore Petrochemicals Limited v. Commissioner of Central Excise & Central Tax, Mangalore Commissionerate [2019-VIL-140-CESTAT-BLR-ST];
3.5 The learned Chartered Accountant also submits that exemption cannot be denied merely in case involving procedural lapses, such as non-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;
Page 5 of 19ST/20007/2022 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 "Revenue Neutrality", as held in the case of Anglo French Textiles vs. Commissioner of C. Ex., Puducherry - 2018 (360) E.L.T. 1016 (Tri. - Chennai), affirmed by Apex Court in Commissioner v. Anglo French Textiles - 2018 (360) E.L.T. A301 (S.C.) and Mahindra & Mahindra Ltd. Versus Commr. Of C. Ex., Mumbai - 2019 (368) E.L.T. 105 (Tri. - Mumbai), which is also affirmed by Apex Court in Commissioner vs. Mahindra & Mahindra Ltd. - 2019 (368) E.L.T. A41 (S.C.);
3.7 As far as non-submission of authorization in Form A2 and declaration of details thereto in Form ST-3 return is concerned, the appellant submits that as part of hearing for pre-show cause notice consultation, copy of Form A2 was duly submitted by the Appellant and the same was also taken on record. Show-cause notice was issued with allegation that authorization in Form A2 is not submitted and declaration thereto is not made in Form ST-3 and hence, liable to pay Service Tax on services rendered to SEZ unit. Show-cause notice issued never alleged that description of services is different in Form A2 from that of services actually rendered i.e., "Architect Services" mentioned in Form A2, whereas services rendered by Appellant being "Works Contract Services", the demand of Service Tax was confirmed on the said allegation (not forming part of show cause notice). Hence, the impugned order has travelled beyond the scope of show-cause notice, which is not permitted under the law. Reliance is placed on various judicial precedents which clearly establishes that order confirming demand cannot override allegations or have new allegations that were not forming part of the show-cause notice. He placed reliance on Paypal India Pvt Ltd Versus Commissioner of Central Tax, Bengaluru East, 2019 (8) TMI 1374 - CESTAT Bangalore.
Page 6 of 19ST/20007/2022 3.8 The third issue is incorrect turnover considered for the Financial Year 2016-17 and April 2017 to June 2017. Detailed reconciliation of turnovers provided at the time of hearing needs to be considered. With regard to interest, it is submitted that there is no additional service tax liability payable by the appellant, hence, the question of levy of interest under Section 75 of the Chapter 5 of the Finance Act, 1994 does not arise. Similarly, penalty equivalent to service tax demanded has been levied on the grounds of suppression of fact by the Appellant in terms of provisions of section 78 of the 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 decisions.
• Uniflex Cables Ltd. -2011 (271) E.L.T. 161 (S.C.) • Commissioner v. Nestle India Ltd. - 2009 (237) E.L.T. A102 (S.C.) • Maruthi Suzuki Ltd vs Commissioner 2018(010) GSTL 0J43 S.C 3.9 With respect to suppression, the learned Chartered Accountant submitted that although the appellant did not declare the gross value in Form ST-3, whereas they had declared only Page 7 of 19 ST/20007/2022 the taxable value but have rightly declared the fact that abatement has been claimed in terms of Notification No. 24/2012 - ST dated 06.06.2012 and offered to tax under partial reverse charge in terms of Sl. No. 9 of Notification 30/2012 - ST dated 20.06.2012, which has been disclosed in their returns furnished in Form ST-3 for service provided to Domestic Tariff Area (DTA) customers and therefore, the question of invoking extended period of limitation does not arise.
4. The learned Authorized Representative reiterating the observations of the Commissioner submitted that the activities undertaken by the appellant squarely falls under the definition of Completion and Finishing Services as defined under the "Commercial or Industrial Construction" vide (Section 65(25b) of the Finance Act, 1994). It is submitted that original construction means, the first or initial construction of a new building or facility. The term 'original construction' shall include the addition of an entire room or floor to any existing building or facility, the completion of any unfinished portion of any existing building or facility and the restoration, reconstruction or replacement of a building or facility damaged or destroyed by fire, flood, windstorm, hailstorm, snowstorm, lightning, explosion or earthquake, but said term shall not include replacement, remodeling, restoration, renovation or reconstruction under any other circumstances. In the instant case, the predominant nature of work is of finishing of the building and cannot by any stretch of imagination be construed as 'original works'.
4.1 With regard to exemption under the SEZ Notification, it is submitted that the conditions of the Notification No.12/2013-ST dated 01.07.2013 is not fulfilled as the services specified were 'Architect Service' and what was supplied was 'Works Contract Service'. The Constitutional Bench of the Hon'ble Supreme Court in the case of Commissioner of Customs (Import) Mumbai Vs. M/s. Dilip Kumar and Company: 2018 (361) E.L.T. 577 (S.C.), wherein the Hon'ble Supreme Court observed that "In case of ambiguity in a charging provision, benefit must Page 8 of 19 ST/20007/2022 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 relevant provisions of the Notification No.11/2014 dated 11.07.2014, which is reproduced below:
Notification No. 11/2014-S.T., dated 11-7-2014 In exercise of the powers conferred by clause (aa) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) number 11/2012-Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, vide number G.S.R. 209(E), dated the 17th March, 2012, the Central Government, hereby makes the following rules further to amend the Service Tax (Determination of Value) Rules, 2006, namely :-
1. (1) These rules may be called the Service Tax (Determination of Value) Second Amendment Rules, 2012.
(2) They shall come into force from the 1st day of July, 2012.
2. In the Service Tax (Determination of Value) Rules, 2006 (hereinafter referred to as the said rules), for rule 2A, the following rule shall be substituted, namely :-
Page 9 of 19ST/20007/2022 "2A. Determination of value of service portion in the execution of a works contract. - Subject to the provisions of section 67, the value of service portion in the execution of a works contract, referred to in clause (h) of section 66E of the Act, shall be determined in the following manner, namely :-
(i) Value of service portion in the execution of a works contract shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract.
Explanation. -- For the purposes of this clause,-
(a) gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid or payable, if any, on transfer of property in goods involved in the execution of the said works contract;
(b) value of works contract service shall include, -
(i) labour charges for execution of the works;
(ii) amount paid to a sub-contractor for labour and services;
(iii) charges for planning, designing and architect's fees;
(iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;
(v) cost of consumables such as water, electricity, fuel used in the execution of the works contract;
(vi) cost of establishment of the contractor relatable to supply of labour and services;
(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: -Page 10 of 19
ST/20007/2022 (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 or restoration or servicing of any goods; or
(ii) maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property, service tax shall be payable on seventy per cent.
of the total amount charged for the works contract. Explanation 1. -- For the purposes of this rule,-
(a) "original works" means-
(i) all new constructions;
(ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;
(iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;
5.2 In the impugned order, the learned Commissioner at Para 13.11 observes as follows: "I have examined the copies of sample invoices raised on their customers .............. I find that the activity undertaken by the noticee in the said documents as "Installation and erection", "civil works", "electrical works", "HVAC works", "interior works" and "data networking". He further states that the appellant in their reply had submitted detailed description of the work done by them which is plastering, water proofing, laying of water pipes, laying of soil pipes, installation of sanitary fixtures, electrical works etc., which is also placed on record before us. The details of works undertaken by the appellant is as below:
Sl. Type of work Details of the work under the category No. mentioned in column no 2.
1 Civil work It includes activities like screed concrete for (including PHE) floors, plastering and waterproofing of walls, laying of water pipes, laying of soil pipes, installation of sanitary fixtures etc.., (includes testing and commissioning thereof).Page 11 of 19
ST/20007/2022 Sl. Type of work Details of the work under the category No. mentioned in column no 2.
2 Electrical works It includes activities of installation of raceways/cable trays, laying of UPS cables, laying of conduits, wiring for points and fixing of light fittings (including testing and commissioning thereof).
3 HVAC works It includes activities like fixing of wooden/aluminium partitions in office, flooring at different parts of the base structure made available, fixing of aluminium partitions, POP for walls, fixing tiles, fixing support for ceiling, laying of carpet etc.., 4 Interior works It includes activities like fixing of wooden/aluminium partitions in office, flooring at different 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 Laying of cable, installation of racks at server Networking 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) is not relevant in as much as the issue before the Supreme Court was whether the contract between the petitioner and the purchaser would fall Page 12 of 19 ST/20007/2022 within the definition of 'works contract'. In the case of M/s. Parul Associated Interiors Pvt Ltd. (supra), the question was with regard to abatement as per Notification No.15/2004 hence, irrelevant. In the case of M/s. Sherbrooke Aluminium Products (supra), the services of construction of doors, windows partitions etc., of commercial buildings was considered as 'completion and finishing services' by the Tribunal and therefore, the similar activities which are undertaken by the appellant as discussed above clearly fall under the category of 'completion and finishing services'.
5.4. With regard to suppression, the learned Commissioner in the impugned order has held that 'the appellant had failed to pay the service tax liable to be paid in respect of 'works contract service' in terms of Rule 2A(ii)(A)(ii) of the Service Tax (Determination of Value) Rules, 2006, thereby resulting in non- payment of service tax'. The learned Commissioner also observed that under the self-assessment regime, the appellant being aware of the legal provisions, the onus is on them to declare and pay appropriate service tax and relying on the decision of the Supreme Court in the case of Union of India Vs. Dharmendra Textile Processors 2008 (231) ELT -3 (SC) upheld the demand for the extended period. This was countered by the appellant on the ground that they were regularly filing prescribed ST-3 returns and providing appropriate details in the return, the question of suppression does not arise. It is also submitted that classification of 'works contract service', whether as original works or not was a question of interpretation of law and hence, in view of the decision by the Supreme Court in the case of Uniflex Cables Ltd. 2001 (271) ELT-161 (SC), Commissioner Vs. Nestle India Ltd. (supra) and Maruthi Suzuki Ltd., Vs. Commissioner (supra), the question of suppression or invoking of extended period does not arise.
The period of dispute is from October 2014 to June 2017 and the notice was issued on 28.12.2020. The relevant Page 13 of 19 ST/20007/2022 provisions of the Section 73 of the Finance Act, 1994 are reproduced below:
"SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. --
(1) Where any service tax has not 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 or five years, as the case may be.
(2A) Where any appellate authority or tribunal or court concludes that the notice issued under the proviso to sub-section (1) is not sustainable for the reason that the charge of,--
(a) fraud; or
(b) collusion; or
(c) wilful misstatement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of service tax, has not been established against the person chargeable with the service tax, to whom the notice was issued, the Central Excise Officer shall determine the service tax payable by such person for the period of thirty months, as if the notice was issued for the offences for which limitation of thirty months applies under sub-section (1).
Page 14 of 19ST/20007/2022 5.5 The fact that the appellant has been regularly filing the ST- 3 returns is not being disputed. The only dispute is the claim of abatement as per the Notification No.11/2014-S.T., dated 11-7- 2014 during the relevant period. To invoke the proviso to Section 73 of the Finance Act, 1994, one of the ingredients such as fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of service tax, has to be established. In the instant case, there is nothing on record to establish that the appellant had suppressed any of the facts or there was any intention to evade payment of duty. The Hon'ble Supreme Court in the case of Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur 2013 (288) E.L.T. 161 (S.C.) observed that unless there is positive evidence to prove that the appellant had suppressed the facts or contravened the provisions of the act, the extended provisions of limitation cannot be extended. Since, in the instant case, nothing is on record to prove the same, we are not inclined to confirm the demand beyond the normal period.
6. With regard to the second issue on the services rendered to the SEZ unit, the only objection taken by the Revenue is the Form A-2 which includes the specified services duly authorized is mentioned as "works contract services" but the specified services to be received by the SEZ unit are "Architect Services". The appellant submits that though the Form A-1 provides exemption to the appellant for providing 'Architect Services' to the SEZ 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.
Page 15 of 19ST/20007/2022 Annexure Default list of Services approved by Department of Commerce Sl. List of Approved Services No.
1. Airport Authority Services
2. Architect Services
49. Technical inspection and certification
54. Transport of goods by Road Services
55. Works contract services 6.1 The Hon'ble High Court in the case of GMR Aerospace Engineering Ltd. Versus Union of India 2019 (31) G.S.T.L. 596 (A.P.) while dealing with the exemptions to the SEZ unit observed as follows:
"30. This is for the reason that Section 26(1) of the SEZ Act made the entitlement to certain exemptions subject to provisions of sub-section (2) of Section 26. Section 26(1) did not make the entitlement of a Developer Page 16 of 19 ST/20007/2022 to certain exemptions, subject to the provisions of something else other than the provisions of sub-section (2). Therefore, the 5th respondent cannot read Section 26(1) to mean that the exemptions listed therein are (1) subject to the provisions of sub-section (2) of Section 26, and (2) also subject to the terms and conditions prescribed in the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Central Tariff Act, 1985 and the Finance Act, 1994. This is especially so, since the authority of the Central Government to prescribe the terms and conditions subject to which exemptions may be granted under Section 26(1), flows only out of sub-section (2) of Section 26. The word "prescribe" is verb. Generally, no enactment defines the word "prescribe".
But the SEZ Act 2005 defines the word "prescribe" under Section 2(w) to mean the rules framed by the Central Government under the SEZ Act, 2005. The space is also not left unoccupied, as the Central Government has issued a set of Rules known as "the Special Economic Zones Rules, 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 payment of duties under the Customs Act, 1962, Customs Tariff Act, 1975, Central Excise Act, 1994, Central Excise Tariff Act, 1985, Finance Act, 1994, Finance (No. 2) Act, 2004 and Central Sales Tax Act, 1956, covered by Section 26 (1); and Page 17 of 19 ST/20007/2022 (3) exemption from payment of state taxes, levies and duties covered by Section 50, provided there is a state enactment to the said effect.
33. The word "prescribe" is used in the present tense in Section 26(2) and in the past tense in Section 7. Both will have the same meaning as assigned to the word under Section 2(w). The moment a set of rules is issued either in respect of matters covered by Section 7 or in respect of matters covered by Section 26(1), there is no scope for invoking any other law for imposing any other condition.
34. The benefit of exemptions granted under the notifications issued under Section 93 of the Finance Act, 1994, are available to any one and not necessarily confined to a unit in a special economic zone. Section 93 of the Finance Act, in that sense is a general power of exemption available in respect of all taxable services. But, Section 26(1) is a special power of exemption under a special enactment dealing with a unit in a special economic zone. Therefore, the notifications issued under Section 93 of the Finance Act, 1994 cannot be pressed into service for finding out whether a unit in a SEZ qualifies for exemption or not. (emphasis supplied)
35. For driving home her contention that SEZ Act, 2005 and the rules framed thereunder do not constitute a complete Code in themselves, Smt. Sundari R. Pispuati, Learned Senior Standing Counsel relied upon two decisions of the Supreme Court and one decision of the Madras High Court. In Ravula Subba Rao v. Commissioner of Income Tax, Madras - AIR 1956 SC 604 relied upon by the Learned Senior Standing Counsel, the question that arose before the Supreme Court was whether the requirement under the Income Tax Rules (as they existed then) for all partners to sign an application for registration personally, would exclude the applicability of the Powers of Attorney Act, 1882, which empowers every agent to do what the principal is capable of doing. The Supreme Court held in that context that the Income Tax Act is a complete Code in itself and that therefore, the question of importing the Powers of Attorney Act, would not arise".
6.2 The above decision was 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:
Page 18 of 19ST/20007/2022 "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 by the appellant in terms of Rule 2A(ii)(B)(ii) of Service Tax (Determination of Value) Rules, 2006. The demand is set aside for the services provided to the SEZ unit. Penalty under Section 78 of the Finance Act, 1994 is also set aside. The appeal is allowed by way of remand for redetermination of duty only for the normal period relating to 'Works Contract Service' rendered and for services meant for other than SEZ units.
Appeal is disposed of in the above terms.
(Order pronounced in Open Court on 21.11.2024.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 19 of 19