Custom, Excise & Service Tax Tribunal
C.L. Thomas, Proprietor, M/S.C.L.T. ... vs Visakhapatnam-Ii on 12 November, 2018
(1) Appeals No. ST/2010/2010
ST/2415/2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Appeal No. Appellant Respondent Impugned Order No. &
Date ST/2010/2010 CCCE&ST, CLT O-I-A No. 10/2010 (V-
Visakhapatna Engineering II)ST, dt. 19.05.2010
m-II Enterprises passed by CCE C&ST
(Appeals), Visakha-
patnam
ST/2415/2010 C.L. Thomas, CCCE & ST, O-I-A No. 10/2010 (V-
Proprietor, Visakhapatna II)ST, dt. 19.05.2010
CLT m-II passed by CCE C&ST
Engineering (Appeals), Visakha-
Enterprises patnam
Appearance
Shri Y. Siri Reddy, Advocate for the Appellant Assessee. Shri Pawan Kumar, Asst. Commissioner /AR for the Respondent. Coram:
Hon'ble Mr. M.V. RAVINDRAN, MEMBER (JUDICIAL) Hon'ble Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 22.10.2018 Date of Decision: 12.11.2018 FINAL ORDER No. A/31413 - 31414/2018 [Order per: Mr. P.V. Subba Rao]
1. Both these appeals are filed against same Order-in-Appeal 10/2010 (V-II)ST, dt. 19.05.2010 passed by Commissioner (Appeals), (2) Appeals No. ST/2010/2010 ST/2415/2010 Visakhapatnam. Appeal No. ST/2010/2010 has been preferred by Revenue against the demands dropped by the first appellate authority while the appeal No. ST/2415/2010 has been preferred by the assessee against the demands confirmed by the first appellate authority. Hence, both these appeals are being disposed of together.
2. The facts of the case, after filtering out unnecessary details, are that the assessee appellant herein are holders of service tax registration for providing taxable services under the category of "Maintenance or Repair Services". During verification of records by the department, it was noticed that they have not discharged the complete service tax for the taxable services rendered by them. After scrutinising the work orders and comparison with ST-3 returns, the department issued a demand notice for Rs. 26,14,277/- covering the period 2003-04 to 2007-08. After following due process, the lower authorities confirmed the demands with interest and imposed penalties as proposed in the show cause notice. Being aggrieved by this order, the assessee preferred an appeal before the first appellate authority, who, vide the impugned order, set aside the demand of Rs.
9,30,262/- for the period prior to 16.06.2005 on the ground that there was no maintenance contract during the relevant period which was necessary. For the remaining period, he re-quantified the service tax as Rs. 3,61,502/-. Revenue's appeal is on the ground that the first appellate authority has not considered the issue in the right perspective as the appellant had maintenance and repair contract from their clients M/s RINL. This contract (3) Appeals No. ST/2010/2010 ST/2415/2010 is in the form of work order No. VSP/WC/STED/53089-0/0/200302994/205, dated 14.05.2003 superscribed as "FORM K" wherein the nature of work was clearly specified as Structural Repair Works. This has been admitted even by the assessee and it is argued that the first appellate authority has wrongly held that there was no maintenance contract and dropped the demand.
3. As regards the second part of the period i.e., for the period post 16.06.2005, the differential of service tax was originally quantified as Rs.15,11,826/- whereas the O-I-A has reduced the amount without sufficient justification. Thirdly, the first appellate authority has also held that an amount of Rs. 5,71,269/- is not liable to be paid for the reason that the principal contractor has fulfilled the obligation of payment of service tax rendered by the asessee as a sub contractor. It is the assertion of the department that the Finance Act, 1994 does not provide for any exemption for payment of service tax for the taxable services provided by the sub contractors. This position was also clarified by Board vide circular No. 96/72007-ST, dated 23.08.2007. It is also contended that the tax already paid by the assessee has been reckoned as Rs. 27,16,855/- in the show cause notice whereas the first appellate authority has taken this amount to be Rs. 29,62,793/-. Thus, he recorded an excess amount of Rs. 2,45,938/- as tax which has been paid without any basis and the records would show otherwise. In view of the above, the Revenue's prayer is to set aside the (4) Appeals No. ST/2010/2010 ST/2415/2010 impugned order and remand the matter back to the original authority or the first appellate authority to decide the case afresh.
4. The appeal of the assessee is against the amount of Rs. 3,68,290/- confirmed by the first appellate authority on the following grounds.
(a) The first appellate authority has wrongly confirmed the demand in respect of the services rendered by them to M/s Tejo Engineering Pvt. Ltd. and Ms Tega Industries (main contractors) who have already discharged the service tax liability while on the same issue with respect to M/s Bridge & Roof Limited, the demand has been set aside in the same order. The first appellate authority has not given any reason for making the distinction between the services provided by them to different clients.
(b) The first appellate authority has erred in confirming the demand of Rs. 2,20,588/- for the services rendered to M/s RINL subsequent to 16.06.2005 for which payments were received prior to that date. Appellant declared the value of the taxable services provided after 16.06.2005 i.e. from the date on which he became liable to pay tax. There was no requirement to pay any service tax on the services for which amount was received prior to 16.06.2005.
(5) Appeals No. ST/2010/2010
ST/2415/2010
5. Ld. Counsel for the assessee reiterated the above submissions and prayed that the Order-in-Appeal may be set aside along with the demand confirmed therein. Ld. DR reiterated the grounds of appeal in the Revenue's appeal.
6. We have considered the arguments on both sides and find that both sides dispute the calculations made by the first appellate authority in modifying the original demand. We also find that the demands prior to 16.6.2005 were set aside by the first appellate authority on the ground that there was no maintenance contract. On a specific query from the Bench, Ld. Counsel for the assessee appellant has produced copies of the documents received by them under which they have rendered the services to their main client i.e. RINL. On perusal, these documents indicate very clearly that they are the contracts for a period of one year. The contract No. VSP/WC/RMHP/54226-0/2316, dt. 28.10.2004 produced before us was with respect to online mechanical repair works and cleaning of wagon tipplers and conveyor galleries of stacking stream in RMHP (Ore & Flux) - Part-1. This period covered 12 months beginning 29.11.2004. Similarly, the contract No. VSP/WC/C&CCD/53072-0/0/2003-04-/1115, dated 18.08.2003 is a contract for a period of 12 months beginning 01.09.2003 for cutting, bagging and loading of solid pitch in coal chemical plant for the year 2003-04. This also indicates detailed terms and conditions of the contract. We, therefore, find that the first appellate authority has clearly erred in holding that there was no maintenance contracts during the period.
(6) Appeals No. ST/2010/2010
ST/2415/2010
As the contract related to online mechanical repair works (supra) prima facie appears to be a maintenance contract, the other one appears to be for some other job. It is therefore essential that all the contracts during the relevant period are examined before coming to a conclusion as to whether they were covered under the maintenance contract or not. For the period post 16.06.2005, Revenue contends that the total amount payable has been wrongly computed by the first appellate authority, firstly by holding that main contractor has paid duty and therefore sub contractor is not required to do so in respect of M/s Bridge & Roof Limited. The assessee also disputes the calculation holding that this benefit was not given for identical cases with respect to three other clients.
7. We also find that Revenue's contends that the appellant assessee has actually paid service tax as indicated in the show cause notice whereas the first appellate authority has taken the excess amount of Rs. 2,45,938/- as having not been paid, without any basis.
8. Since both sides contend that the First Appellate Authority made error in calculations and we find incorrect recording that there were no maintenance contracts, we find that this is a fit case to be remanded back to the first appellate authority to reconsider the documents and pass a fresh order. Therefore, without passing any comments on the merits of the case, leaving all issues open, we remand the matter to the first appellate authority (7) Appeals No. ST/2010/2010 ST/2415/2010 to examine all documents produced by both the parties and pass a reasoned order based on the documents available.
9. The Appeals are allowed by way of remand to the first appellate authority.
(Pronounced in open Court on 12.11.2018)
(P.VENKATA SUBBA RAO) (M.V. RAVINDRAN)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
vrg