Touchstone Infrastructure and Solutions Private Limited Vs Commissioner of Central Taxes and Central Excise(CESTAT Chenaai)
Conclusion: Where VAT had been paid on the goods component of the composite works contract, no service tax could be levied on such component again taking recourse to Rule 2A(ii) of Service Tax (Determination of Value) Rules, 2006.
Held: Assessee-company provided finishing services on works contract basis to various parties. It charged a single amount for the entire contract without invoicing separately for the goods and the services. It was liable to pay service tax on these services under the head of works contract service and was also liable to pay VAT on the goods component of these contracts. Assessee paid VAT on the goods component reckoning 70% of the total contract of the value of the goods as per the provisions of Tamil Nadu Value Added Tax Act and Rules and paid service tax on 30% of the total contract value. The case of Revenue was that since assessee could not ascertain the actual value of goods transferred, it should have paid service tax under composition scheme. After calling for information from assessee and examining the records, a show cause notice was issued to assessee demanding differential service tax of Rs. 1,51,82,658/-. It was held that VAT had been paid on the goods component of the composite works contract, no service tax could be levied on such component again taking recourse to Rule 2A(ii) of Service Tax (Determination of Value) Rules, 2006. The demand for the period post 01.07.2012 also needed to be set aside. Since the demand of service tax did not sustain, the demand of interest under Section 75 and imposition of penalty under Section 76, 77, and 78 did not also survive.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed by the appellant assailing order-in-appeal dated 27.08.20181 passed by the Commissioner of GST & Central Excise (Appeals – I), Chennai upholding the order-in-original dated 23.03.2018 passed by the Additional Commissioner of GST & Central Excise, Chennai.
2. The facts of the case, after filtering out unnecessary details, are that the appellant provides finishing services on works contract basis to various parties. This work includes providing false ceiling, flooring, glazing, fixing up of partition, electrical work etc. The appellant charges a single amount for the entire contract without invoicing separately for the goods and the services. It is undisputed that the appellant is liable to pay service tax on these services under the head of works contract service and the appellant is also liable to pay VAT on the goods component of these contracts. The appellant paid VAT on the goods component reckoning 70% of the total contract of the value of the goods as per the provisions of Tamil Nadu Value Added Tax Act and Rules and paid service tax on 30% of the total contract value. The case of the Revenue is that since the appellant could not ascertain the actual value of goods transferred, it should have paid service tax under composition scheme. After calling for information from the appellant and examining the records, a show cause notice dated 21.12.2016 was issued to the appellant demanding differential service tax of Rs. 1,51,82,658/- as follows :-
