Custom, Excise & Service Tax Tribunal
Gold Infrastructures vs Commissioner Of Central Tax, Bangalore ... on 7 December, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2
Service Tax Appeal No. 1502 of 2010
[Arising out of Order-in-Appeal No. 142/2010 dated 26.03.2010
passed by the Commissioner of Central Excise,
(Appeals-II) Bangalore.]
M/s. Gold Infrastructure
No.79/1, 2nd Cross, Lavelle Road
Bangalore - 560 001 ............Appellant
VERSUS
Commissioner of Central Tax,
Bangalore North
No. 59, Ground Floor,
HMT Bhavan, Bellary Road,
Bangalore - 560 032 .............Respondent
Appearance:
Mr. Anwar, Advocate for the Appellant Mr. Rajesh Shastry, Authorised Representative for the Respondent Coram:
Hon'ble P.A. Augustian, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical) Final Order No. 21339 / 2023 Date of Hearing: 20.11.2023 Date of Decision: 07.12.2023 Per P.A. Augustian M/s Gold Infrastructure, appellant provides work contract service for construction of residential apartments and service apartments. During the period June, 2005 to March, 2006 the appellant has provided services of "Construction of Complex Service" and "Commercial and Industrial Complex Service". Page 1 of 6 Alleging that the activities carried out by the appellant are leviable to service tax under "Construction of Complex Service" and "Commercial and Industrial Complex Service", SCN was issued on 21.11.2006. Appellant submitted that the service provided by them are not liable to service tax. However, adjudication authority confirmed the demand of service tax. An appeal was filed assailing the order before Commissioner (Appeals), who has rejected the appeal. Aggrieved by the impugned order, present appeal is filed.
2. When the matter was taken up for hearing, Learned Counsel for the appellant drew out attention to the agreement entered by the appellant and submits that the issue in the present appeal is whether the activity of "Construction of Complexes" and "Construction of Industrial and Commercial Complexes" prior to 01.06.2007 is leviable Service Tax. Learned counsel for the appellant further submits that the Finance Act, 2007 expressly made such "Works Contract" leviable to service tax vide clause (zzzza) to sub-section 105 of Section 65 of the Finance Act, 1994. It is further submitted that issue is settled by Hon'ble Supreme Court in the case of Commissioner of Central Excise & Customs, Kerala Vs. Larsen & Toubro Ltd 2015 (39) STR 913 (SC) and held that the levy of service tax on works contract fails prior to 01.06.2007, in absence of a charging section, which was introduced only with effect from 01.06.2007. Relevant extract of the Apex Court's decision is hereunder:
"15.....This being the case, we feel that the learned counsel for the assesses are on firm ground when they state that the service tax charging section itself must lay down with Page 2 of 6 specificity that the levy of service tax can only be on works contract, and the measure of tax can only be on that portion of works contracts which contain a service element which is to be derived from the gross amount charged for the works contract less the value of property in goods transferred in the execution of the works contract. This not having been done by the Finance Act, 1994 it is clear that any charge to tax under the five heads in Section 65(105) noticed above would only be of service contracts simpliciter and not composite indivisible works contracts."
3. Learned counsel for the appellant further submits that this ruling of the Hon'ble Apex Court in Larsen & Toubro Ltd (supra) was again affirmed by the Hon'ble Apex Court in the case of Total Environment Building Systems Pvt Ltd Vs. Deputy Commissioner of Commercial Taxes (2022 (63) G.S.T.L 257 (SC) wherein it was held that-
"23. It is in the above backdrop that the definition of Works contract inserted for the first time by virtue of Section 65(105 (zzzza) under the Finance Act, 2007 assumes significance and had to be applied w.e.f 1st June 2007. Thus, on and from the enforcement of the amendment in the Financial Year 2007,i.e, 1st June, 2007 the tax on the service component of works contract became leviable. Therefore, till then service component of works contract became leviable. Therefore, till then it was not so leviable as there was no concept of works contract under the said Act. Page 3 of 6
26. Therefore, reliance placed by the assesses in the present case on the aforesaid judgments is just and proper. On the other hand, the contention of Ms. Diwan, Ld ASG to the effect that even prior to the aforesaid amendment being made to the Finance Act, 1994 service tax on works contract was leviable is not correct. It was being levied on purely service contract and not on service element of works contract as there was no definition of a works contract till then. Hence, the amendment made to the Finance Act, 1994 by insertion of the definition of works contract as under
clause (zzzza) is not clarificatory in nature. Having found that the service tax was not at all leviable on service element of a works contract, Parliament felt the need for the amendment and was so incorporated by the Finance Act, 2007."
4. The decisions of the various Hon'ble Courts and Tribunals holding that service tax is not leviable on works contract services provided prior to 01.06.2007 are as under:
(i) C.S.T Bangalore Vs. Turbotech Precision Engineering Pvt Ltd (2010 (18) STR 545 (Kar.)
(ii) Commr. Of C.Ex & S.T Panchkula Vs. Satish Kumar Contractor Ltd 2019 (25) G.S.T.L 211 (P&H)
(iii) Delhi Jai Board Contractors Welfare Association Vs. Union of India 2019 (26) G.S.T.L 180 (Del)
(iv) Larsen & Toubro Ltd., Vs. Commissioner of Service Tax, Kolkata 2020 (32) G.S.T.L 538 (Cal.) Page 4 of 6
(v) Ircon International Ltd., Vs. Commissioner of Service Tax, Delhi 2017 (5) G.S.T.L 221 (Tri.Del)
5. In view of the above the learned Counsel submits that the demand be set aside on the construction activity carried out by the appellant prior to 01.06.2007 in light of non-existence of the charging section to levy tax.
6. Learned Authorised Representative (AR) for the Revenue reiterated the finding in impugned order and submits that at the relevant time, the service rendered by the appellant was subject to service tax and considering the law laid down by Hon'ble Apex Court in the case of M/s Larsen & Toubro (Supra) service tax is not applicable in the appellant's present case.
7. Heard both sides and perused the records. We find that as per the clauses of the agreement and subsequent RA bills show that the activity carried out by the appellant is a composite contract. As per the law laid down by the Hon'ble Apex Court in the case of Commissioner of Central Excise & Customs Kerala Vs. Larsen & Toubro Ltd (supra), the activities carried out by the appellant, which fall under the category of works contract are subject to levy of service tax only after 01.06.2007. Further, the Learned AR submits that at the relevant time the service rendered by the appellant was subject to service tax and considering the law laid down by Apex Court in the matter of M/s Larsen & Toubro Ltd Vs. Commissioner of Service Tax, Kolkata (2020 (32) G.S.T.L 538 (Cal) (Supra) service tax is not applicable in appellant case. Page 5 of 6
8. Considering the above discussion and the ration laid by the Hon'ble Apex Court in Larsen and Toubro(supra), appeal is allowed with consequential relief, if any, as per law.
(Order pronounced in Open Court on 07.12.2023) (P.A. Augustian) Member (Judicial) (Pullela Nageswara Rao) Member (Technical) Ganesh Page 6 of 6