Disclosure of Cost of Material and Labour in Invoice: CESTAT orders Re-examination [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ordered re examination on the ground that there was proper disclosure of cost of material and labour in invoice.

The appellants, N R Engineering & Contractors are engaged in providing services under the category of Commercial or Industrial Construction Service. During the course of audit, it was observed that the Appellant has issued bill No. 10 to M/s GEN TEK Technology Pvt Ltd. for Rupees one crore and paid Service tax of Rupees one lakh on labour charges and not on the gross value.

On being pointed out, the appellant had stated that the government has issued Notification No. 12/2003 by giving general exemption for all taxable services from levy of Service tax of the value of goods and material sold by the service provider and as they have shown the value of material sold separately in the invoice, service tax is liable to be paid only on labour charges.

The Notification No. 15/2004-ST provided exemption to the taxable serviceprovided by a Commercial concern to any person, in relation to construction service from so much of the Service Tax leviable in excess of the Service tax calculated on a value which is equivalent to 33% of the gross amount charged from any person by such commercial concern and shall include the value of goods and materials supplied or used by the provider of the construction service.

The amended Notification No. 4/2005-ST cannot be used with a retrospective effect and has always to be taken prospectively. Thus, it was concluded that the appellant has wrongly availed the benefits of Notification No. 12/2003 –ST and thereby not paid Service tax.

The Adjudicating authority confirmed the demand of Service tax under Section 73(1) of the Finance Act, 1994 and ordered to recover interest under Section 75 and imposed penalty under Section 76 and 78 of the Finance Act. Being aggrieved with the order the appellant preferred the appeal before the Commissioner (Appeals), upheld the Order of lower adjudicating authority. Aggrievedthe appellants is before the Tribunal.

A Bench consisting of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “The condition in the Notification is only production of documentary proof indicating the value of the goods and materials supplied. This does not in any manner mean that the goods have to necessarily be supplied under invoices. Therefore, evidence was produced before the authority and the sufficiency of it has to be examined.”

“We hereby set aside the impugned order of the Commissioner (Appeals) and remand the matter to the Original Authority to reconsider the matter afresh and pass order after permitting the appellant to lead documentary evidence to establish its claim on the value of goods and materials supplied in execution of its contracts for construction services for availing of the benefit of Notification No. 12/2003-S.T.

To Read the full text of the Order CLICK HERE

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