Case Law Details
M/s. Sem Construction Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Brief facts of the case are that the appellant had been awarded a contract under agreement dated 01.04.2011 by M/s. Archelean Chemical Private Limited at Rann of Kutch for job of “metal spreading for supply uncourse black Trap Rubble stone” and its spreading/dressing along the outer edge of bund for formation of toe wall land filling the trenched with stones above ground level, constructing the pitching above toe line, using stones or filling at various cuts in bunds and dressing of entire bund slope, before metal spreading. The charges for the said single and composite work were specified in two parts. In metal spreading 1) for metal spreading & Toe wall and 2) for labour work for spreading metal. A further contract vide agreement dated 18.04.2012 was also awarded to the appellants for job of supplying and spreading GSB on top of road, including compaction with roller, for which separate rates were specified for the work of GSB as well as for compaction. The appellant had discharged the service tax on the aforesaid activities under the three taxable service categories of works contract, construction service & formation service. The department seeks to deny such classification of services and contend that the services provided by appellant to M/s. Archelean Chemical Private Limited, are only classifiable under “site formation and clearance and excavation, earthmoving services” under section 65 (105) zzza of the Finance Act, 1994 as against the claim of appellant under „works contract‟. Accordingly the show cause notice dated 09.10.2015 was issued for the period 2010-11 to 2014-15 wherein the differential service tax demand was raised with propositions for equal penalty and other penalties under sections 76 & 77 and also applicable interest under Section 75. The show cause notice also invoked the larger period for making demand of service tax. The original adjudicating authority namely the Commissioner of Service Tax Rajkot, confirmed the entire demand of the service tax raised and also imposed penalty vide Order in Original dated 27.09.2016. Being aggrieved by the said Order in Original, the appellant filed the present appeal before us.
2. Shri. Hasit Dave, Learned Counsel appearing on behalf of the appellant submits that the work awarded to the appellant is not only for „spreading of GSB metals‟, but also supply of un-course black trap stone, excavating trench, along the outer edge of bund formation of toe wall, filling the trenches with stone above ground level, constructing the pitching above toe-line using stones, earth filling at various cuts in bunds and dressing of entire bund slope before metal spreading. As per the above activities it was for composite work which included supply of metals, earth work, construction work and spreading of metals. He submits that there is contract which included „supply‟ , then there must be a „sale‟ and it is also a fact that as the contract involved „sale‟, there was payment of VAT and thus it becomes a works contract. He submits that the bunds constructed was pertaining to commercial or industrial construction and the appellant had to provide service for creation of/ completion of bunds, which are immovable property for the appellant‟s client company, as the same is used for the salt harvesting and transportation purpose. The bunds are considered as fixed assets (Immovable property) for the salt manufacturing company and the activity related to the bunds are covered under the Work Contract Service as provided under the definitions of works contract. The VAT is payable on the creation of such bunds, therefore the service provided in the present case are classified only under „Works Contract Service‟. As the appellant has to provide services along with material, which are related to the commercial construction service and since the sales tax is also leviable under the provision of GVAT Act, 2006 on the property so transferred therefore the service of supplying GSB and spreading thereof through which bunds are created are in nature of commercial or industrial construction and since the VAT is also leviable on the said transfer of property in goods involved in provision of service.
2.1 He submits that there are gross contradictions too in the finding of the Learned Commissioner. His finding that appellant is only doing job of metal spreading and all other activities undertaken by them are ancillary thereto, which are preparing sites for activities undertaken for bunds is therefore a Site Formation Service, akin to defined activity of Site Excavation and formation services, is entirely misplaced against the very definition under the Act and clearly wrongly interpreting Works Contract Services. It is his submission that in fact the activities undertaken by the appellant relate to construction of bunds which are used for storage of water, as Roads for patrolling there. The activities therefore are not Site formation or clearance or excavation, but rightly works contract for construction of bunds. He submits that in almost all „works contract‟ services, it is sale of certain materials along with service which generally is used for construction of „immovable property‟, but in any case what is sold is the construction or repairing materials, being „immovable property‟ and structure that is constructed is „immovable property‟, which is not sold. In the present case also, what was sold/supplied was GSB metals/stones and not the „bunds‟, but with GSB metals/stones and using other materials and services, bunds were constructed. In case the „contractor‟ is not registered with the VAT department then in those cases, the recipient of works contract service, in which there is supply of materials also, pays the applicable VAT on behalf of the service provider. Appellant also submits that the provision of Tax Deduction at Source was inserted in the Gujarat Value Added Value Tax, 2003 vide section 59A and 59B. In the present case the service recipient has discharged the VAT and same was deducted at source from the bill amount payable to the appellant. He also submits that in the appellant‟s own case on the same issue for the subsequent period, the Learned Commissioner (Appeals) vide Order No. RAJ-EXCUS-000-APP-144-2018-19 Dated 06.07.2018 set aside the demand of service tax raised under the category of “Site Formation and Clearance and Excavation, Earthmoving services” in respect of the same services and appeal was allowed.
2.2 He further submits that in any case the invocation of the larger period of limitation is also not applicable in the facts of the present case as everything was clearly declared to the service tax department and on the same service the appellant had been discharging the service tax regularly and declared in ST-3 returns, therefore there is no suppression of facts. In support of his submissions, he placed reliance in the following judgments:-
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