The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that no tax is liable on construction contracts executed prior to 1st June, 2007.The tax exemption is applicable not to providers of commercial or industrial construction service but to providers of works contract service.
The assessee,H P Singh Chadha is engaged in the construction of Residential/Commercial Complexes on contract basis in respect of government departments/Civic authorities and private agencies. The Construction services and construction of residential complex services were brought under the service tax net w.e.f. 10.09.2004 and 16.06.2005 respectively.
The assessee contended that the Works Contract was undertaken by thim are not subject to service Tax under construction of residential/complex service as is made out by the Revenue in the show cause notice, further, the service tax liability of Rs. 56,89,867/- has been calculated after allowing abatement of 67% gross amount charged under Notification No. 18/2005-ST dated 07.06.2005 and Notification No. 01/2006-ST dated 01.03.2006 considering that contracts were composite Contracts including both labour and material. Assessee further contended that order is not sustainable in law as the same has been passed without properly appreciating the facts and the law and the binding judicial precedents. He further submitted that it is not disputed that the contract executed by the appellant was Works Contract which includes the material and the service element.
Revenue contended that the assessee had not paid service tax amounting to Rs. 56,89,867/- under proviso to Subsection(1) of Section 73 of Finance Act against the appellant along with interest and equal penalty under Section. Revenue also contended that the assessee was liable to pay the penalty of Rs. 5,000/- under Section 77 of the Act and also penalty imposed under Section 76 of the Act..
The two member bench comprising S.S.Garg( Member, Judicial ) and Anjali Kumar( Member, Technical ) held that the contracts executed by the appellant are nothing but works contracts. The bench held that “the said findings of the adjudicating authority that the appellant is eligible for abatement of 67% of the value of the goods is in itself the acceptance of the fact that the contracts were executed with material.” The bench dismissed the impugned order.
Assessee was represented by Naveen Bindal. Revenue was represented by Pawan Kumar.
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