Custom, Excise & Service Tax Tribunal
Nk Construction vs Guwahati on 3 October, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 2
Service Tax Appeal No. 75738 of 2014
(Arising out of Order-in-Original No. 12/Commr/ST/GHY/13-14 dated 30.01.2014
passed by the Commissioner of Central Excise and Service Tax, Guwahati, Sethi Trust
Building, G.S. Road, Bhangagarh, Guwahati - 781 005)
M/s. N.K. Constructions : Appellant
Samannay Path, House No. 7,
Khanapara, Guwahati - 781 022 (Assam)
VERSUS
Commissioner of Central Excise and Service Tax : Respondent
Guwahati, Sethi Trust Building, G.S. Road, Bhangagarh,
Guwahati - 781 005
APPEARANCE:
Shri Arunava Ghosh, Advocate for the Appellant
Shri Tariq Sulaiman, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 77101 / 2024
DATE OF HEARING: 10.09.2024
DATE OF DECISION: 03.10.2024
ORDER:[PER SHRI K. ANPAZHAKAN] M/s. N.K. Constructions, Samannay Path, House No. 7, Khanapara, Guwahati - 781 022, Assam, (hereinafter referred to as 'appellant') is engaged in the construction of factory sheds and other industrial construction at industrial units in and around Guwahati.
2. The Officers of the Anti-Evasion Unit of the Guwahati Commissionerate initiated an investigation against the appellant and upon completion of the investigation, issued a Show Cause Notice dated Page 2 of 9 Appeal No.: ST/75738/2014-DB 12.04.2013 to the appellant inter alia demanding Service Tax of Rs.2,20,40,827/- (including cesses) under the category of 'commercial or industrial construction service' for the period from 01.10.2007 to 30.09.2012. The Notice alleged that the appellant had undertaken 'commercial or industrial construction service' to various clients as per the Work Orders received by them and that the Work Orders did not indicate that any material was supplied by the appellant. Accordingly, it was alleged that the appellant is ineligible for the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 and the notice proposed to deny the benefit of Notification No.01/2006-S.T. dated 01.03.2006. The Notice also demanded service tax under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service'.
3. The said Notice was adjudicated by the Ld. Commissioner vide Order-in-Original No. 12/Commr/ST/GHY/13-14 dated 30.01.2014 wherein the Ld. Commissioner has confirmed the demand of Service Tax of Rs.2,20,40,827/- (including cesses) along with interest under the category of 'commercial or industrial construction service' for the period from 01.10.2007 to 30.09.2012. In the impugned order, the Ld. adjudicating authority allowed the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 in respect of some Work Orders and denied the benefit in respect of the remaining Work Orders. He also confirmed the demand of service tax under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service'. He also imposed equal amount of tax confirmed as penalty under Section 78 of the Finance Act, 1994 and Rs.10,000/- as penalty under Section 77 of the Act.
Page 3 of 9Appeal No.: ST/75738/2014-DB
4. Aggrieved against the confirmation of these demands, the appellant has filed this appeal.
5. It is the submission of the appellant that the Work Orders received by them clearly indicate that all the commercial or industrial construction works were carried out by them along with materials; this is evident from the Work Orders enclosed with the Show Cause Notice. The appellant submits that the adjudicating authority, after verification of the Work Orders allowed the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 in respect of some of the Work Orders and rejected the benefit in respect of the remaining Work Orders. The Appellant submits that they have evidence on record to show that they have used 'materials' while executing all the Work Orders. Thus, they submitted that if the issue is remanded back to the adjudicating authority, they will be able to prove the usage of 'materials' in all the Work Orders. Accordingly, the appellant has prayed for setting aside the demands confirmed in the impugned order and remand the matter back to the adjudicating authority for the purpose of verification of usage of materials in all the Work Orders where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 has been denied in the impugned order.
5.1. Regarding the invocation of the extended period of limitation to demand Service Tax, they submitted that there was no intention to evade payment of Service Tax and there was no mens rea on their part. The appellant also submitted that no Service Tax was charged in the bills. Further, it is submitted that the issue of eligibility of benefit of Notification No. 01/2006-S.T. dated 01.03.2006 is a question of fact which needs to be verified based on the materials Page 4 of 9 Appeal No.: ST/75738/2014-DB available on record and accordingly, the appellant contends that the demand of Service Tax by invoking the extended period of limitation is not sustainable.
5.2. Regarding the demand of service tax under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service', the appellant submits that they are not contesting the demand of service tax. However, they prayed for setting aside the penalties imposed in the impugned order on account of confirmation of demands under these categories.
6. The Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order.
7. Heard both sides and perused the appeal records.
8. We observe that the appellant has undertaken 'commercial or industrial construction service' and availed the benefit of Notification No. 01/2006-S.T. dated 01.03.2006. The claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006.
8.1. From the submissions made by the appellant in their Grounds of Appeal, we observe that the adjudicating authority allowed the benefit of the Notification01/2006-S.T.dated 01.03.2006 in respect of some of the Work Orders and rejected the benefit in respect of the Work Orders pertaining to the below mentioned units:
Page 5 of 9Appeal No.: ST/75738/2014-DB Sl. No. Service Recipient 1 M/s. Emami Limited 2 M/s. CG Foods 3 M/s. IVRCL Infrastructure & Projects Ltd.
4 M/s. Maruti Quality Food Products (P) Ltd.
5 M/s. Driplex Water Engineering Ltd.
6 M/s. Star Cement Meghalaya Ltd.
7 M/s. CG Galva India 8 M/s. Vishal Infrastructure Ltd.
9 M/s. Radiant Manufacturers Pvt. Ltd.
10 M/s. Sonalika Food Processing Industry 8.2. The appellant submits that materials have been utilized in respect of all the Work Orders executed by them and hence they are eligible for the benefit of Notification No. 01/2006-S.T dated 01.03.2006 in respect of all the contracts. In support of this claim, the appellant submitted some documents pertaining to the Work Orders where the benefit of the Notification was rejected by the adjudicating authority. For the sake of ready reference, copy of one such document pertaining to the Work Order where the benefit of Notification No. 01/2006-S.T dated 01.03.2006 has not been extended is scanned and extracted below: -Page 6 of 9
Appeal No.: ST/75738/2014-DB [ref. page 109 of Appeal No. ST/75738/2014-DB] 8.3. A perusal of the document extracted above indicate that materials have been used in respect of this contract and hence, the benefit of Notification No. 01/2006-S.T dated 01.03.2006 is to be extended to this Work Order.
8.4. It is the submission of the Appellant that they have evidence on record to show that they have used 'materials' while executing all the Work Orders. It is their submission that if the issue is remanded back to the adjudicating authority, they will be able to prove the usage of 'materials' in respect of all the Work Orders (where the benefit of Notification No. 01/2006-
S.T. dated 01.03.2006 was not extended).
Page 7 of 9Appeal No.: ST/75738/2014-DB 8.5. Accordingly, in the interest of justice, we set aside the demands confirmed in the impugned order under the category of 'Commercial or industrial construction service' and remand the matter back to the adjudicating authority for the purpose of verification of usage of materials in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended) and examine the eligibility of the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 in respect of those Work Orders as well. The appellant is directed to produce all the documents evidencing that materials have been used in the said Work Orders. After examining the documents, the adjudicating authority should pass a speaking order with respect to eligibility of the benefit of Notification No. 01/2006- S.T. dated 01.03.2006 in respect of all the remaining Work Orders also (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended).
9. Regarding the invocation of extended period for demanding Service Tax, we observe that the appellant has not collected Service Tax from its customers. Further, the appellant was of the view that they were eligible for the benefit of exemption under Notification No. 01/2006-S.T. as they were using materials. Thus, we observe that suppression of facts with intention to evade the tax has not been established in this case. Therefore, we hold that the demand of Service Tax from the appellant by invoking the extended period of limitation is not sustainable. The demand in the instant case has been raised for the period from 01.10.2007 to 30.09.2012 while the impugned Show Cause Notice was issued on 12.04.2013. Accordingly, the demand is to be restricted to the normal period of Page 8 of 9 Appeal No.: ST/75738/2014-DB limitation and the verification by the adjudicating authority, as above, is also to be restricted to the normal period of limitation alone.
10. Regarding the demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service', we observe that the appellant has not contested the demands of service tax on these categories. Accordingly, we uphold the demands of service tax along with interest confirmed under these categories. Since there is no evidence brought on record to establish suppression of facts with intention to evade payment of tax in respect of these demands, we hold that no penalty imposable on the appellant with respect to these confirmed demands.
11. In the result, we pass the following order: -
(i) We set aside the demands confirmed in the impugned order and remand the matter back to the adjudicating authority for the purpose of verification of usage of materials in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended) so as to decide the eligibility of the benefit of Notification No. 01/2006-S.T. dated 01.03.2006. Since the invocation of extended period of limitation is not sustainable, we hold that the verification of usage of materials is required to be done only with respect to the Work Orders executed within the normal period of limitation, if any.Page 9 of 9
Appeal No.: ST/75738/2014-DB
(ii) We uphold the demand of service tax along with interest confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service'. However, no penalty is imposable on the appellant with respect to these confirmed demands.
12. The appeal is disposed of in the above manner.
(Order pronounced in the open court on 03.10.2024) Sd/-
(R. MURALIDHAR) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd