K. Villaudam Vs Commissioner of Central Excise (CESTAT Chennai)
CESTAT Chennai held that extended period of limitation rightly invoked as non-payment of Service Tax has been detected and investigated by the Anti-evasion Unit of the Commissionerate.
Facts- The allegation against the appellant is that he was engaged in the activity of construction of office buildings, erection of cell phone towers and other connected civil structures, civil work relating to maintenance of office buildings in respect of M/s. BSNL, Tiruchirappalli, CPWD, National Institute of Technology, Thuvakudi, Tiruchirappalli, etc., without taking Service Tax registration and without payment of Service Tax, without filing ST-3 returns, during the period from April 2005 to March 2009.
Accordingly, a Show Cause Notice vide was issued proposing demand Service Tax of Rs.8,70,873/-towards construction service / commercial or industrial construction service / works contract service and towards cleaning activity provided by the appellant during the period from April 2005 to March 2009, invoking the provisions of Section 73(1) of the Finance Act, 1994 and also proposing to impose penalties under Sections 76, 77 and 78 of the Act.
The Joint Commissioner of Central Excise and Service Tax, Tiruchirappalli held that the services rendered by the assessee would fall under the category of ‘construction service’ u/s. 65(30a) of the Finance Act, 1994 with effect from April 2005, under ‘commercial or industrial construction service’ u/s. 65(25b) of the Finance Act with effect from 16.06.2005 and under ‘works contract service’ u/s. 65(105)(zzzza) of the Finance Act with effect from 01.06.2007 and consequently, vide Order-in-Original No. 43/2010-ST dated 28.12.2010, has confirmed the above demands of Service tax and imposed a penalty of Rs. 5,000/- u/s. 77 of the Act and also a penalty of Rs.8,70,873/- u/s. 78 of the Act.
The lower appellate authority has upheld the Order-in-Original which is impugned herein.
Conclusion- Held the activities undertaken by the appellant were in the nature of works contract, the demands raised under construction service and commercial or industrial construction service till 31.05.2007 are not sustainable.
We find that the appellant has not taken registration, and have not paid Service Tax on the considerations received for the services rendered to M/s. BSNL, CPWD, National Institute of Technology, etc. The non-payment of Service Tax by the appellant has been detected and investigated by the Anti-evasion Unit of the Commissionerate and as such, we hold that the extended period has been rightly invoked in this case.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Shri K. Villaudam, Civil Contractor, who is the appellant herein, has filed this appeal against the Order-in-Appeal No. 107/2011 dated 18.10.2011 passed by the Commissioner of Customs & Central Excise (Appeals), Tiruchirappalli.
2. The allegation against the appellant is that he was engaged in the activity of construction of office buildings, erection of cell phone towers and other connected civil structures, civil work relating to maintenance of office buildings in respect of M/s. BSNL, Tiruchirappalli, CPWD, National Institute of Technology, Thuvakudi, Tiruchirappalli, etc., without taking Service Tax registration and without payment of Service Tax, without filing ST-3 returns, during the period from April 2005 to March 2009.
3. On the basis of intelligence collected by the Anti-evasion Unit of the Commissionerate and investigations conducted after obtaining various documents such as copies of work orders, balance sheets, Form 16-A issued by M/s. BSNL and statements recorded from the appellant, a Show Cause Notice vide C.No. V/ST/15/45/2010-Cx.Adj. dated 10.06.2010 came to be issued, proposing to demand Service Tax of Rs.8,70,873/-towards construction service / commercial or industrial construction service / works contract service and towards cleaning activity provided by the appellant during the period from April 2005 to March 2009, invoking the provisions of Section 73(1) of the Finance Act, 1994 and also proposing to impose penalties under Sections 76, 77 and 78 of the Act.
4. The Joint Commissioner of Central Excise and Service Tax, Tiruchirappalli held that the services rendered by the assessee would fall under the category of ‘construction service’ under Section 65(30a) of the Finance Act, 1994 with effect from April 2005, under ‘commercial or industrial construction service’ under Section 65(25b) of the Finance Act with effect from 16.06.2005 and under ‘works contract service’ under Section 65(105)(zzzza) of the Finance Act with effect from 01.06.2007 and consequently, vide Order-in-Original No. 43/2010-ST dated 28.12.2010, has confirmed the above demands of Service tax and imposed a penalty of Rs. 5,000/- under Section 77 of the Act and also a penalty of Rs.8,70,873/-under Section 78 of the Act.
5. The lower appellate authority has upheld the Order-in-Original vide Order-in-Appeal No. 107/2011 dated 18.10.2011, which is impugned herein.
6. We have heard Shri A.K. Jayaraj, Learned Advocate representing the appellant and Shri R. Rajaraman, Learned Authorized Representative appearing for the Revenue.
7.1 The Learned Advocate appearing for the appellant has argued that the Joint Commissioner had erred in demanding Service Tax under construction service with effect from 10.09.2004 and under commercial or industrial construction service from 16.06.2005 to 31.05.2007 and under ‘works contract service’ with effect from 01.06.2007 as the service provided under a specific category could not be taken out and taxed under other category of service prior to 01.06.2007 as the nature of service of works contract is deliberately split into two categories of service. He would submit that while passing this order, the documentary evidence relating to deduction of Sales Tax by the service recipients was not considered.
7.2 He has put forth that the demand of Service Tax vide the Show Cause Notice dated 10.06.2010 is time-barred as none of the ingredients under Section 73(1) of the Finance Act have been met to invoke the extended period of limitation.
7.3 He has vehemently argued that the services rendered would not fall under construction service or commercial or industrial construction service as their services would be coming under works contract service with effect from 01.06.2007. He submitted that from the returns filed before the Sales Tax Department, it could be seen that the appellant had rendered activity in the nature of works contract and so, they are taxable only from 01.06.2007 since the activity falls under the definition of ‘works contract service’ as defined under Section 65(105)(zzzza) of the Finance Act, 1994.
7.4 In support of his arguments, the Learned Advocate for the appellant has relied on the following decisions: –
(i) Commissioner of C.Ex. & Cus., Kerala v. M/s. Larsen & Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)];
8.1 The Learned Authorized Representative appearing for the Revenue has reiterated the findings of the lower authorities. He submitted that the appellant had not taken Service Tax registration, had neither paid any Service Tax nor filed their Service Tax returns till the time investigation was taken up by the Department and that the services rendered by the appellant would be taxable under ‘construction service’ under Section 65(30a) of the Finance Act, 1994 with effect from 10.09.2004, under ‘commercial or industrial construction service’ under Section 65(25b) with effect from 16.06.2005 and under ‘works contract service’ under Section 65(105)(zzzza) with effect from 01.06.2007.
8.2 He has also contended that the levy of Service Tax on construction service was introduced with effect from 10.09.2004 and the appellant have been providing taxable services, had received payments during the period from April 2005 to March 2009 for such taxable services provided, but had not paid the Service Tax, did not follow the procedures laid down for payment of Service Tax nor filed their turns, with an intention to evade payment of Service Tax. So, he has argued that the demands raised and penalties imposed are justified.
9. We have considered the submissions made by both sides and perused the records, as available.
10. The issues that arise for decision in this appeal are:-
