Sconce Global Private Limited VS Commissioner of Service Tax (CESTAT Delhi)
CESTAT held that there was no levy of service tax on composite works contract services involving supply of goods/deemed supply of goods and rendering services under any head before 1.6.2007.
It is undisputed that the services provided by the appellant were on turnkey basis and a composite amount is charged by the appellant for its services and for the goods used in providing them. It is undisputed that the appellant treated this as works contract services and paid VAT to the respective State Governments as appropriate. The appellant had classified these services with effect from 1.6.2007 under the head “works contract service” and had classified them under the heads of “commercial or industrial construction service” and “erection commissioning or installation service” prior to this date and paid service tax. Even while paying service tax under these heads before 1.6.2007 the appellant had claimed abatement as available under various notifications.
It has been settled by the Supreme Court in the case of Larsen & Toubro that composite works contract services involving supply of goods/deemed supply of goods and rendering services are a separate species of contract known to commerce and must be treated as works contract services only. Such services become taxable under the head of works contract service under Section 65(105)(zzzza) of the Finance Act, 1994 with effect from 1.6.2007.
Prior to this there was no charge of service tax on works contract services. Therefore, there was no levy of service tax on such composite services under any other head before 1.6.2007.
Since it is undisputed that the appellant’s contract involved provisions of services as well as supply/deemed supply of goods they can only be classified under the head “works contract services” as per the law laid down in Supreme Court in Larsen & Toubro. Such services could not have been charged with service tax under any other head either before or after 1.6.2007. The show cause notices demanding service tax under the head “Pandal and Shamiana services” from the appellant, therefore, cannot be sustained. Consequently, the impugned orders need to be set aside.
FULL TEXT OF THE CESTAT DELHI ORDER
These two appeals are filed on the same issue and hence are being disposed of together. Miscellaneous application No. 50120 of 2021 appears to have been wrongly filed in ST/50375/2018 as it refers to impugned order in ST/50395/2021. Nevertheless, the prayer in the Miscellaneous application is to link and hear both these appeals together which we accept.
2. We have heard learned Counsel for the appellant and learned Authorised Representative for the Revenue.
3. The facts of the case, in brief, are that the appellant is engaged in the business of setting up stalls for various companies at exhibitions. Photographs of some stalls such as Korea Pavilion 2014 World Food of India, Mumbai, Bharat Electronics Stall, 2011, ABB Stall at ACREX, 2008, Bengaluru ABB Stall at Elecrama, 2012, Bengaluru were produced by the learned Counsel for the appellant in the synopsis. The appellant had classified its services under the head of erection, commissioning and installation service and commercial or industrial construction service prior to June 01, 2007 and it has classified them as “works contract service” after June 01, 2007 when Section 65(105)(zzzza) was introduced as a separate taxable service in the Finance Act, 1994. Show cause notices dated 20.04.2012, 12.12.2012, 2.5.2014, 23.4.2015, 5.5.2016 and 18.4.2018 were issued by the Revenue covering the period 20062007, 2016-2017. The first five show cause notices were disposed of by order in original dated 2.5.2017 which has been assailed in ST/50375/2018. Show cause notice dated 18.4.2018 was decided by order in original dated 24.11.2020 which is impugned in Appeal ST/50395/2021. All the show cause notices proposed classifying the appellant’s service under the head “Pandal and Shamiana” services and recover differential duty from the appellant. The impugned orders have demanded and confirmed recovery of differential duty aggregating to Rs. 16.75 crores. Further penalties were imposed under Sections 75, 77 and 78 of Finance Act, 1994 are imposed upon the appellant. The details of the show cause notices are as follows:
