ALMECH ENTERPRISES Vs. COMMISSIONER OF SERVICE TAX, MUMBAI

JUDGEMENT

(1.) P .R. Chandrasekharan, Technical Member -The appeal and stay application are directed against order -in -original No. 25/ST/SB/2011 -12 dated 17/02/2012 passed by the Commissioner of (TAR), Mumbai. When the stay application was considered earlier, this Tribunal had directed the appellant vide order No. S/1051/2012/CSTB/C -I dated 24/07/2012 to make a pre -deposit of Rs. 1.5 crores within a period of eight weeks and report compliance on 25/10/2012. The said order was made on the ground that the applicant had not produced any evidence in respect of the goods and raw materials sold before the adjudicating authority. The appellant challenged the said order before the Hon'ble High Court of Bombay and the Hon'ble High Court vide order dated 05/12/2012 in Central Excise Appeal (L) No. 113 of 2012 set aside the stay order of the appellate Tribunal and directed the Tribunal to consider afresh the stay application filed by the appellant. The Hon'ble High Court came to the conclusion that from the records of the case it is seen that the appellant had produced documentary evidence regarding the value of the goods and materials provided for completion and finishing services in execution of job work. In pursuance of the said order, we are considering the matter.

(2.) THE Ld. Counsel for the appellant submits that the appellant M/s. Almech Enterprises, Mumbai, undertook completion and finishing services involving providing of glass facade for the buildings using glass sheets and aluminium channels. They had claimed the benefit under Notification No. dated 01/03/2006 which provides for abatement while computing the taxable value from the gross amount charged. The said notification, provides for abatement of 61% from the gross amount charged in respect of commercial/industrial construction services. However, the said notification excluded the completion and finishing services from its scope and therefore, the department was of the view that the abatement claim made by the appellant cannot be allowed. The appellant had made an alternate submission that even if they are not eligible under Notification No. 1/2006 -ST, they would still eligible for benefit of notification which provided for exclusion of value of goods sold or supplied while rendering the service, provided no credit of duty paid on such goods and materials sold has been taken under the provisions of Cenvat Credit Rules, 2004. The appellants have not taken any such credit and therefore, they are rightly eligible for the benefit of notification. However, the adjudicating authority did not accept this plea and disallowed the benefit under Notification No. 12/2003 and confirmed the service tax demand of Rs. 3.74 crore for the period 18/04/2006 to 09/05/2008 along with interest thereon apart from imposing penalties under sections 76, 77 and 78 of the Finance Act, 1994. 2.1 The Ld. Counsel for the appellant further submits that they had produced documentary evidences before the adjudicating authority by way of copies of VAT returns, balance sheets, purchase documents and invoices indicating sale of aluminium panels and glass sheets. However, the adjudicating authority has rejected this contention of the appellant on the ground that completion and finishing services by its nature would not involve the supply and sale of goods. Accordingly he has rejected the claim of the appellant that sale of goods were involved in rendering of the service without appreciating the documentary evidence adduced by the appellant. 2.2 The Ld. Counsel also submits that they had been paying service tax on the completion and finishing services since 30/11/2004 under the category of construction services. However, they realised that they were not required to pay service tax on these activities since the definition of construction service was amended to include the completion and finishing services with effect from 16/06/2005. Therefore, the activity undertaken by the appellant was very well known to the department and therefore, extended period of time could not have been invoked to confirm the demand in the instant case. He also assured that if the department so wants, they would able to produce the documentary evidence substantiating the claim that they have sold the goods during the rendering of completion and finishing service on which they have paid VAT/ST under the category of works contract service. In view of the above, he prays for grant of stay.

(3.) THE Ld. Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority and submits that in the absence of any documentary evidence, the decision given by the adjudicating authority is correct in law.