The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the value of raw materials not added to determine service tax liability when the contract simpliciter uses the service of commercial and industrial construction without a supply of any raw materials.
Vrutika Enterprise, the appellant assessee was engaged in providing three different services namely service provided to Rajkot Nagrik Sahkari Bank Limited, Tanna Cranktech Pvt. Limited and Precision Industrial Component are classifiable under “Commercial or Industrial Construction” as defined under Section 65(30a) and 65(25b) read with Section 65 (105)(zzq) of the Finance Act,1994.
The assessee provided service to Suzlon Infrastructure Limited and Suzlon Infrastructure Service Limited are classifiable under the category of “Erection, Commissioning or Installation” service under Section 65(105)(D) of the Finance Act, in addition to “Commercial or Industrial Construction” service and the service provided are also classifiable under the category of “Works Contract” under Section 65(105)(a) of the Finance Act.
The assessee appealed against the order passed by the Commissioner, Customs and Central Excise for confirming the demand of service tax of Rs. 2,12,91,371/- under the provision to Section 73(1) of the Finance Act with interest under Section 75 and imposing penalties under Section 78, 76 and 77(2) of the Finance Act.
PD Rachchh, the counsel for the assessee contended that the service portion of the contract will be charged under the service of “Commercial and Industrial Construction” before 01.06.2007 and the value of raw materials will not be added for determination of taxable value.
Further submitted that the CENVAT credit was admissible on input services and capital goods where abatement was not claimed subject to the production of necessary documents.
Tara Prakash, the counsel for the department relied on the decisions made by the lower authorities and contended that the determination of value of services made by the department was as per the law and liable to be sustained.
The Bench observed that when there was a contract simpliciter for the “Commercial and Industrial Construction” service without a supply of any raw material by the assessee, the taxability will be determined under this service only without adding the value of raw materials.
The two-member bench comprising Ramesh Nair (Judicial) and C.L Mahar (Technical) held that the demand for service tax and the penalty along with interest imposed by the department on the assessee was not sustainable and liable to be quashed and directed re-adjudication to the adjudication authority and the assessee would be allowed to produce any documents which may be required in the interest of justice.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
