Appellants are engaged in business of manufacturing Ready Mix Concrete (RMC). While supplying the goods they delivered it at the desired location on site by pumping of the RMC to the spot where it was required. Revenue has made out a case that this activity is covered under ‘Commercial & Industrial Construction Services’ and imposed service tax on the entire consideration received for RMC after allowing the abatement of 67% under Notification No.l/06-ST.
The submission of the learned Counsel for the appellants is that the credit is mostly in respect of capital goods only and there is only a small portion of credit attributable to input services. He submits that the portion of Rule 6(3)(c) will apply only in respect of credit taken in respect of inputs and input services and not capital goods. When such credit alone is considered, the utilization is well within the prescribed limit in the said Rule and therefore, demand is not maintainable.
The appellants were sending their manager/ employees to hotels run by the subsidiary/ associate companies on deputation. They were recovering costs on actual basis and were not retaining any amount out of the payment made by the hotels run by the subsidiary/ associate companies. The contention of the Department is that the appellants were engaged in manpower supply service as they were supplying their manpower to hotels run by associate companies on a cost recovery basis.
As per provisions in Taxation of Services (Provided from Outside India and Received in India), Rules 2006 the question whether the service in question is imported is decided with reference to location of the recipient of service for service specified under section 65(105)(r) but is decided with reference to place of performance for service specified at section 65(105)(y). That is to say if the impugned service is classified as Management Consultancy, service tax is payable in the instant case but if it was classifiable as service of Market Research Agency then tax was not payable for the reason that the service is performed entirely outside India.
The decisions of the Tribunal in the case of CCE v. Future Polyesters Ltd. [Final Order No. 782 of 2011, dated 8-7-2011] is clearly to the effect that most of the impugned activities would not fall under the definition of Management Consultancy service. Though compliance with laws is part of the responsibilities of management such responsibility per se cannot bring it into the ambit of the words ‘in connection with the management of any organization’ used in section 65 (105)(r) and section 65(65) to tax such services
It is no longer, res integra that in a contract for providing service of the type involved in this case the service component and value of materials can be separated. Notification 12/2003-ST also recognises this principle. The only dispute that remains is whether value of materials sold “can be segregated based just on the value on which VAT is paid.
We find that show cause notice stands issued on 7-2-2007 for the period 1-7-2003 to 31-8-2004, thus invoking the longer period of limitation. Tribunal in the case of Brij Motors (P.) Ltd. v. CCE [Final Order No. ST/601/2011, dated 22-11-2011] as [2012 (25) STR 489 (Tri – Delhi)] has taken note of the fact that the were decisions of the Tribunal holding in favour of the assessees and as such has held the demand to be barred by limitation.
The appellant filed this appeal against the impugned order whereby the demand of service tax on the ground that the appellants, for the purpose of paying service tax, did not include the value of materials used by them for providing such service. The contention of the appellant is that demand is time-barred as the show-cause notice was issued on 22.9.2006 demanding service tax for the period 16.7.2001 to 31.3.2005 by invoking extended period on the ground of suppression. The appellant submitted that the Tribunal, in CCE v. R.K. Photo studio vide Final Order Nos. ST/503-504/2011 dated 25.8.2011, after taking into consideration the Board Circular F. No. 233/2/2003-CX dated 7.4.2004, held that the demand beyond the normal period is not sustainable, in such type of case.
Even if it was accepted that the canteen service provided by the assessee was necessary for improving the efficiency of the worker and the same was eligible for Cenvat credit but in terms of Larger Bench decision in the case of CCE v. GTC Industries Ltd. [2008] 17 STT 63 (Mum. – CESTAT) there is no dispute about the fact that as part of the cost of providing canteen service had been recovered from the workers and to that extent the assessee would not be eligible for the Cenvat credit.
Hon’ble Supreme Court in the case of Singh Enterprises v. Commissioner 2005 (189) ETL A-113 (SC) has held that Commissioner (Appeals) has no power to condone the delay beyond the period of 90 days. We also refer to a listed decision of the Hon’ble Supreme Court in the case of Rajasthan Mechanical Works vide which Delhi High Court judgement was upheld.
