Vrutika Enterprise Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
CESTAT Ahmedabad held that single invisible contract involving supply of raw material and construction activity is classified under works contract hence taxable only from 01.06.2007. However, in case of divisible works contract clearly defining value of service portion and raw material is classifiable under ‘Commercial and Industrial Construction’ prior to 01.06.2007.
Facts- On the basis of an intelligence, enquiry was conducted against the appellant who were engaged in providing “Commercial or Industrial Construction” service falling u/s. 65(105)(zzq) of the Act. On the basis of investigation, it was found that during the period 2004-05 to 2008-09, the appellant had failed to pay the service tax for the services of “Commercial and Industrial Construction” provided to various customers and accordingly the demand of Rs. 2,12,91,371/- was made vide show cause notice dated 23.10.2009 which has been confirmed vide the impugned order.
Conclusion- We find adjudicating authority has not correctly examined the classification whether the impugned goods fall under the category of “Commercial or Industrial Construction” or “Works Contract” during the relevant time. Hon’ble Apex Court in the case of 2022 (63) G.S.T.L. 257 (S.C.) TOTAL ENVIRONMENT BUILDING SYSTEMS PVT. LIMITED vs. DEPUTY COMMISSIONER OF COMMERCIAL TAXES has held that prior to 01.06.2007, service tax levy was applicable to service contracts simpliciter and not to indivisible works contract which contained both the elements of transfer of property in goods as well as labour and services and same were brought under the service tax net for the first time on 01.06.2007.
As regards admissibility of benefit of cum-tax value for determination of assessable value, we are of the considered view that where the appellant has not issued a taxable invoice, andthe services have been held to be taxable later-on as a result of investigation, the gross value charged by the appellant has be considered as “cum-tax value” under rule 67(2) of the Act.
Further, held that TDS is nothing but part of the taxable value which comes back to the service provider in terms of the income tax deposited by the recipient. Thus the same is taxable and shall be part of the “gross amount charged” as given in explanation (c) to Section 67 of the Act.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
1. The appellant has filed this appeal against the impugned order vide which Ld. Commissioner, Customs and Central Excise, Rajkot has confirmed a demand of Rs. 2,12,91,371/- under proviso to Section 73(1) of the Finance Act, 1994 (herein after referred to as “The Act”) with interest under Section 75 and imposing penalties under Section 78, 76 and 77(2) of the Act.
2. Briefly stated facts of the case are that on the basis of an intelligence, enquiry was conducted against the appellant who were engaged in providing “Commercial or Industrial Construction” service falling under Section 65(105)(zzq) of the Act by the Officers of Head Quarters Preventive Unit, Central Excise Commissionerate, Rajkot. On the basis of investigation, it was found that during the period 2004-05 to 2008-09, the appellant had failed to pay the service tax for the services of “Commercial and Industrial Construction” provided to various customers and accordingly the demand of Rs. 2,12,91,371/- was made vide show cause notice dated 23.10.2009 which has been confirmed vide the impugned order. The details of the demand confirmed are mentioned in the table below:-
