It is an admitted fact on record that the appellant received the Order-in-Original on 30th December, 2009 and filed appeal before learned Commissioner (Appeals) on 2.1.2012. So also admittedly, there was a delay of more than two years in seeking appeal remedy before the learned first appellate authority.
It is an admitted fact that the appellants are liable to pay service tax under Works Contract services with effect from 1-6-2007 and the appellants did not get themselves registered with the service tax department from 1-6-2007. The ground taken by the appellants is that they were not aware of the fact that they are liable to pay service tax under works’ contract with effect from 1-6-2007 is not sustainable, as ignorance of law is not an excuse.
The assessee contested that the impugned activity was a joint business involving no service from one party to other. Therefore in view of CBEC circular 108/2/009 dated 29-1-2009 no service tax arises in such context. The main contention was there that was a joint venture between the landowners and the assessee where profit of the joint venture was shared by both the parties. The landowner made available his land and the assessee did construction activity and constructed flats were divided in a ratio agreed at the time of execution of Joint Development Agreement. It could not be considered that the assessee was providing any service to the landowners. The assessee was paying back the consideration for his share of the land which he bought through the Development Agreement by compensating in the form of flats constructed and handed over to the landowners.
Appellants have filed a writ petition against the stay order dated 13.10.2011 passed by the Tribunal and Hon’ble Madras High Court had dismissed the writ petition. As the order passed by the Tribunal is merged with the order passed by the Hon’ble High Court, hence the Tribunal has no power to modify the stay order dated 13.10.2011. Further, we note that the vide order dated 19.12.2011 has granted time to make deposit as per the stay order passed by the Tribunal by 30.01.2012 and the appellants had not complied with the directions of the Hon’ble Madras High Court. Therefore, the appeal is dismissed for non-compliance with the provisions of section 35 of the Central Excise Act.
After the amendment of Rule 6 of CENVAT credit Rules, 2004 by Finance Act, 2010, in view of the provisions section 73 of Finance Act, 2010, when an assessee gave a calculation of credit attributable to the inputs used in the manufacture of exempted products, the only option available to Revenue was to either accept the calculation or say what is wrong with the calculation and give Revenue’s calculation with proper basis and ask the assessee to rebut Revenue’s calculation. It was no longer open to demand 10% of the price or 5% of the price as the case may be of the exempted products. Therefore, we feel that the order has not been passed properly. Therefore, after waiving the requirement of predeposit for hearing the appeal, we proceed to decide the appeal itself.
In the instant case, the expenditure in respect of CMC charges was incurred by the assessee in discharging its primary responsibility as a CHA. In view of the clear provisions of rule 5 of the Service-tax (Determination of value) Rules, 2006, the CMC charges are to be included in the assessable value of the taxable service provided by the assessee. As regards the issue of time bar, it was found that the assessee never disclosed the fact that CMC charges are recovered from its customers in the ST-3 returns in which the statutory returns were filed by the assessee, wherein there was a separate column in which the assessees had to show the reimbursable expenses. Therefore, there was no merit in contention of assessee in respect of time bar also.
Appellants made a request before the adjudicating authority for an opportunity to produce evidence to show that the cost of design and drawing are included in the assessable value of patterns/castings and appropriate duty is paid. This contention has not been taken into consideration by the adjudicating authority. In view of the above, the impugned orders are set aside and the matter is remanded to the adjudicating authority to decide the matter afresh upon showing the proof of deposit of the amount so directed and after giving adequate opportunity of hearing to the appellants.
Service Tax – Construction of complex service -The Appellants argue that there is no relationship of service provider and service recipient between the Developer and the Land Owner. According to them it is a relationship in a joint venture for profit. Both the parties have joined together in the business of construction of complex and the land owner brings in the capital by way of his land. The Developer by way of his capital and services and they jointly construct the complex and use or sell the flats for profit. He argues that CBEC had clarified the position that no service arises in such context. This clarification dated 29-01-09 is examined later in this order.
3. The dispute relates to eligibility of CENVAT Credit of Service Tax paid in respect of services received in relation to ‘Repair and Maintenance’ of the staff colony relating to the period Apr.’08 to Dec.’08. Learned SDR submits that the identical issue relating to the same respondent stands decided in favour of the department in the case of Commissioner of Central Excise, Trichy Vs Grasim Industries reported in 2011 (21) S.T.R.378 (Tri.-Chennai) = (2011-IST-68-CESTAT-MAD) .
Term Input services clearly include services relating to setting up, modernization, renovation or repairs of a factory. It inter-alia includes services received in connection with security. Insuring plant and machinery to safeguard against interruption/destruction/break-down and to cover loss of profit due to stoppage of work due to perils like fire, riot, terrorist attack, damages etc. is necessarily a precautionary measure to safeguard against any unwarranted situation of the business. The security of a company does not merely depend upon the physical security and insurance against such perils definitely assures the financial security of the business.
