Trupti Construction vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No.ST/50/11

(Arising out of Order-in-Appeal No.PII/AV/178/2010 dated 26/11/2010 passed by Commissioner of Central Excise (Appeals), Pune-II)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Trupti Construction Appellant Vs. Commissioner of Central Excise, Respondent Kolhapur

Appearance: Shri.B Gaikwad, Advocate for appellant Shri.A.B.Kulgod, Asst. Comm. (AR), for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing : 09/07/2015 Date of Decision : 09/07/2015

ORDER NO

Per: M.V. Ravindran

1. This appeal is directed against Order-in-Appeal No.PII/AV/178/2010 dated 26/11/2010 passed by Commissioner of Central Excise (Appeals), Pune-II.

2. Heard both sides and perused the records.

3. The issue involved in this appeal is regarding the demand of service tax on various services rendered by the appellant mainly construction of commercial and industrial construction services, site formation services, excavation and earthmoving and demolition service. Both the lower authorities after following the due process of law, confirmed the demands along with interest and also imposed penalties.

4. The learned Counsel appearing on behalf of the appellant submits that the appellants are not disputing the tax liability but are seeking the reduction on the tax liability on the ground of material supplied free of cost for the construction activities undertaken by them and also setting aside of the penalties on the ground that the entire service tax liability and interest stands paid, as also there was a bonafide impression that the contracts entered by the appellant was works contract and is taxable from 01/06/2007.

5. On perusal of the records, it transpires that the taxability of the services rendered by the appellant is not in question. The learned Counsel submitted that demand as per the show-cause notice is Rs.17,36,852/- and after giving adjustments for cum tax and various other deductions, the first appellate authority has confirmed the demand of Rs.14,81,918/-. It is his submission that the service tax liability, which has been worked out by the lower authorities on the free supply of materials by the customers needs to be excluded is correct as the Larger Bench of this Tribunal in the case of Bhayana Builders (P) Ltd. Vs. CCE  2013 (32) STR-49 (Tri-LB) is holding a view that value of free supply of materials cannot be included in gross value for the discharge of service tax liability.

6. Respectfully following the said view, we hold that the service tax liability which has been confirmed by the first appellate authority should be re-worked out taking into consideration the free supply of materials. According to the learned Counsel, the net service tax that would be payable after extending benefit of Larger Bench decision would be Rs.4,06,343/-.

7. We direct the lower authorities to verify and authenticate the said amount. We also note that the appellant has discharged the service tax of Rs.11,14,772/- and interest of Rs.1,44,689/- as per the worksheet submitted. Revenue is also directed to check these details of payments.

7.1 Now this takes us to penalty imposed by the adjudicating authority and upheld by the first appellate authority. We do find merits in the arguments put forth by the learned Counsel that during the relevant period, the issue whether the works contract would be liable for service tax prior to 01/06/2007 under specific head, was being agitated before the various judicial forum. The issue has now been settled by the Larger Bench.

7.2 In view of the same, we find that this is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 for setting aside the penalties imposed under various sections. We set aside the penalties imposed by the adjudicating authority and upheld by the first appellate authority by invoking the provisions of Section 80 of the Finance Act, 1994.

8. Appeal is disposed of as indicated here in above.

(Pronounced in Court)

(Raju) Member (Technical) (M.V. Ravindran) Member (Judicial)

pj

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